Episode 197: Rob Hanson, Monolith, and Jigar Shah, US DOE
Rob Hanson
Today's guests are Rob Hanson, CEO & Co-Founder of Monolith, and Jigar Shah, Director of the Loan Programs Office, at U.S. Department of Energy.
Rob is the co-founder and chief executive officer of Monolith, where he leads the development of next-generation technology for producing low cost, low emission hydrogen and carbon black, an important raw material used in the manufacture of rubber and plastic. Prior to Monolith, Hanson served as the global director of product management for AREVA Solar, the solar division of the world’s largest nuclear company. He has a master’s degree in mechanical engineering from Stanford, and has been a guest lecturer at Stanford, UNL, Foothill College and the University of Saskatchewan on topics ranging from thermodynamics to entrepreneurship.
Jigar Shah
Jigar was most recently co-founder and President at Generate Capital, where he focused on helping entrepreneurs accelerate decarbonization solutions through the use of low-cost infrastructure-as-a service financing. Prior to Generate Capital, Shah founded SunEdison, a company that pioneered “pay as you save” solar financing. After SunEdison, Shah served as the founding CEO of the Carbon War Room, a global non-profit founded by Sir Richard Branson and Virgin Unite to help entrepreneurs address climate change. Originally from Illinois, Shah holds a B.S. from the University of Illinois-UC and an MBA from the University of Maryland College Park.
I was eager for Rob and Jigar to come back on the show to discuss Monolith's recent $1B loan from the DOE's Loan Programs Office. Rob provides us with an overview of Monolith, key phases of the company thus far, and the motivations for seeking public funding. Jigar explains his role at the LPO, why traditional VCs aren't built for early-stage climatetech, and how the private and public sectors can address climate change. We also discuss the government's role in the carbon-free future, how to re-align incentives for traditional funders, and advice Rob and Jigar have for entrepreneurs in the climate space. This is a great episode and a must-listen for anyone at the intersection of climate and finance.
Enjoy the show.
You can find me on twitter @jjacobs22 or @mcjpod and email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded February 7th, 2022
In Today's episode, we cover:
Rob's overview of Monolith, the company's mission, and Rob's role
A review of Jigar's role, the DOE's role in the clean future, and what the Loan Programs Office (LPO) does
Monolith's recent $1B loan from the Jigar's department at the DOE from Jigar and Rob's perspectives
The key stages and phases of Monolith and the reasons why they didn't go down the V.C. path early on
Why climate-focused startups and their time horizons are not built well for venture capital, according to Jigar
What led Monolith to seek out a federal grant rather than continue with private equity
How Jigar moved from Generate Capital to the LPO
The types of companies and projects that fit with the LPO
LPO's competitors and how the office measures success
The motivations for startups to seek public financing
The application process and acceptance criteria for the LPO to award funding to a startup
If early-stage startups are well equipped to work with the government and the stuck points between private and public collaboration
The government's role in addressing climate change
Why there is a misalignment of incentives for early-stage V.C.s as they dive into climate investing
Advice Rob & Jigar have for managing partners at traditional early-stage venture firms
How we foster an environment where companies addressing climate change can succeed and find accessible financing
Links to topics discussed in this episode:
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Jason Jacobs: Hey, everyone. Jason here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey, or MCJ as we call it, membership option. Membership came to be because there were a bunch of people that will listen to the show that weren't just looking for education, but they were longing for a peer group as well. So we set up a Slack community for those people. That's now mushroomed into more than 1,300 members. There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for: determination to tackle the problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying, and a collaborative spirit.
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Hello everyone. This is Jason Jacobs and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change, and try to figure out how people like you and I can help. Today's guests are Jigar Shah, director of the Loan Program Office at the Department of Energy and Rob Hanson, co-founder and CEO of Monolith, a company that is building a first of its kind billion dollar facility that produces ammonia and carbon black, as well as hydrogen. Now recently Monolith received conditional approval for a little over a billion dollar loan from the US department of energy to support renewable power production of hydrogen, ammonia and carbon black via an expansion of its facilities in Hallam, Nebraska.
Now that loan came from Jigars office. So I was excited to bring Jigar back on for what is actually his third appearance on the show. And Rob second to discuss this collaboration, the progress that Monolith has made since the last time that Rob came on the show, which I think was a couple years ago at this point. We talk about Jigars new role at the DOE, how that came about, why that came about, and how Jigar thinks about impact in the role he's in relative to roles he's been in historically at places like Generate firm that he helped co-found as well as SunEdison back in the day. And then we have a great discussion about the capital stack in general and risk and the role of the private sector. The role of government, what skill sets are required from companies to play better with government? How it's advantageous to them as well as to the collective good. And in the aggregate, what we can do to unclog the arteries of the system to make progress faster. This is a really great discussion and I'm excited for you to listen to it. Jigar, Rob, welcome back guys.
Jigar Shah: Thanks for having us. Are we the first people to be on twice?
Jason Jacobs: Jean was on twice, right? Because he, wait, were you, is this your third time on the show Jigar?
Jigar Shah: Yeah, I guess I was on that special with Jean.
Jason Jacobs: How do we let this have three times seems like too much. I mean, maybe not from your shoes Jigar but gosh-
Jigar Shah: I feel like it's a, it's like that SNL sketch with the five, the five timers club. I need a jacket, Jason.
Jason Jacobs: [laughs] Exactly. No, my overnight camp growing up, I got a five year jacket and I thought that was pretty special. Maybe, maybe there's like a, like a three time MCG guess-
Jigar Shah: [laughs]
Jason Jacobs: ... hat or something. Something that's loud and very conspicuous if you try to walk around on the street with it.
Jigar Shah: [laughs]
Jason Jacobs: So, and Rob you've been on before as well.
Rob Hanson: Yeah. Thanks for having me back, Jason.
Jason Jacobs: Well, it's been a while and, um, a fair bit further in my journey, although I still feel completely wet behind the ears and you of course have had some exciting things going on and well, you both have had quite a bit change since you each came on last. So maybe for starters, just to give listeners context, Rob, talk a bit about Monolith and what you do, and then Jigar, maybe do the same with the DOE and the loan program office. And, and then we can jump into some of the things that you're doing together as well.
Rob Hanson: Yeah, so Monolith is the clean hydrogen and clean materials company, and we have this really unique process it's called methane pyrolysis. And what it does is it leverages this unique feature of methane, which is if you heat methane up to really high temperatures without any oxygen around it's splits into solid carbon and hydrogen. And it does two things for you. One, you've just made clean hydrogen because the carbon is coming out as a solid, not carbon dioxide. And then number two, and this is unique about our technology. If you do it right, that solid carbon comes out as this petrochemical called carbon black. And it goes, and displaces what's otherwise made in a very dirty process. What's it essentially an essential product that goes into things like tires and batteries and plastics and, and inks.
Jigar Shah: Yeah, no, I think that's exactly why we were so excited about it. And on my side, the department of energy's loan programs office was conceived of in the 2005 Energy Policy Act by Senator Pete V. Domenici. And it was really funded for the first time in, at scale in 2009 during the Aero stimulus bill under the president Obama. And we put about 35 billion in loans out the door during that 2009 to 2011 time period. And then it was largely dormant since then we did a follow on loan with, for the Vogtle nuclear plant and a few other things. But at the core, the loan programs office has the ability to step in and be the first commercial banker for all of these technologies. That's what the origin goal was in 2005. There's a recognition that yes, some of these technologies require people to lean in, but also that there's a lot of dynamics at commercial banks that cause people not to lean in and pay attention, right?
And largely it's due to the fact that, I mean, if you could make your numbers with standard solar and wind projects, why would you bother understanding methane pyrolysis and writing four white papers for your investment committee and doing all the hard work that it would take to do a first of a kind plant in Hallam, Nebraska. And so a lot of folks just can't get the attention. And I felt the same way when I was at SunEdison in 2003, you know, starting power purchase agreements for solar, which today are obvious. Everyone thought it was too risky and, you know, we ended up having to work with the speculations group at Goldman Sachs for the first financings. Right?
And so that's the goal the loan programs office is to provide that liquidity function to these technologies that frankly have been around for a while. I mean, you know, Rob's technology has been around for 30 years, but in terms of actually a commercial functioning, first of a kind plant, you know, it really hasn't achieved that until, you know, the most recently Olive Creek one that Rob's, you know, scaling up and then of course this new, larger plant once he has it fully constructed.
Jason Jacobs: And I, I don't wanna get too far down the path with what you're doing together, but just to frame it, maybe talk a bit and I mean, Rob, you can go first, but talk a bit about just the, the nature of the relationship between Monolith and the loan program office. And, and then I've got some questions for each of you and we can come back around to dig deeper into, into that relationship.
Rob Hanson: Yeah. So, so for us, it was really, we built the company for about 10 years all on corporate equity and where that got us is it got us through our pilot plant or demonstration plant and up to the first commercial unit. So that's kinda where we sit today. We've built a full scale commercial unit. It's the largest methane paralysis plant ever built. And it proves the technology at full scale. It gets us into the markets, but it's not a world scale plant, right? It's a world scale unit and there's a difference there.
And so to go to a world scale plant and actually start making these products at scales that matter to customers and matter to the climate requires a whole bunch more capital. And I think maybe there's a path to do that on corporate equity. I think a few companies have been able to do that, you know, Tesla, for example. But I think the real solution is you've gotta start entering the project finance market, which is project debt and project equity. And that's where it gets super tough when you're talking, you know, billion dollar plus projects, still some risks involved and they're new. And so they require like Jigar was saying, you know, six white papers to be written on all these different aspects of business. That's what brought us to the DOE LPO back in late 2019 is, you know, this program that's kind of tailored for that stage of our development. So that's how we met.
Jason Jacobs: And Jigar what about from your side? What's the origin story of the, of the Monolith collaboration from the other side of the desk?
Jigar Shah: Yeah. Look, I think that, you know, they came through the front door and, you know, went to the loan programs office for support. I came in, in March of 2021. Right. And so I stepped into that process midstream. I'd say the loan programs office was still using the model of the 2009 to 2011 timeframe because that's what they knew. And that included 20 year power purchase agreements with utilities that included technologies like solar and wind. And so while the loan programs office was enthusiastic about what Monolith represented, I don't think that they necessarily had a clear frame on how to process that loan through the loan programs office, given the historical context of projects we've done in the past. And so part of my role when I came in, in March was really to say, "Hey, there's a couple of things that we need to do here."Right?
One is that the 2020 Energy Act allows us to do merchant curves. So instead of requiring Rob to get a long term hedge on carbon black, which would mean he'd probably have to give 25% of the net proceeds of that sale to the hedge provider, we should take that merchant risk, right. And we should actually create a merchant curve and we should lend against the merchant curve. And yes, certainly we're gonna provide a wider debt service coverage ratio than, you know, solar receives, but we should be able to do that. And that power, I think, existed beforehand, but was reinforced by Congress in the 2020 Energy Act. So I was able to push on that a little a bit. And I think the other thing I was able to do was to say, to Rob, "Look, I get the fact that your first instinct is to fight us on every single deal point across a 25 page term sheet, but you're working with the federal government.
So one, we're a lot less flexible than that. And so we're not gonna make all these changes. And two, you know, the federal government is not in the business of being a private equity firm. Like we don't want to go in seize your asset and sell it off to the highest bid to somebody else to make a good return on investment, you know, on our tax dollars. We want you to be successful. And so some of the things that you're protecting for in a traditional commercial bank environment is not the same dynamic with the federal government. And I think that, I think through that exercise, we were both able to educate Monolith on, you know, how to work with our type of commercial debt, which frankly has a lot of parallels with the big money center banks.
I mean, they really like our due diligence approach and have said multiple times that if they get, if projects get through our office and are more likely to be taken up for plan number two with them. But secondly, like we were able to really educate the staff at the loan programs office on what LPO 2.0 might look like under secretary grant homes leadership.
Jason Jacobs: And Rob, if I recall from the first time that you came on the show, you from the earliest days and correct me if I'm wrong, but you, you essentially, you skipped the venture capital path. And even of the early stage equity, you brought in these big PE firms and they stayed with you through the ride and had long time horizons, deep pockets and patience. Can you talk a bit about the key phases and stages for Monolith? And I know you've been at it for a while and the sources of capital for those phases. And, and also just reflect on if you were doing the same thing today, whether those would be the same or, or whether they, that they might be different given both what you learned and the current state of the market relative to when you came in. And I think it was 2012.
Rob Hanson: Yeah. So I know Jigar will recall, you probably do two Jason, but like 2012, the particularly Silicon valley venture market still had a raging headache hangover from Cleantech 1.0, so it was not a market at that time like it is today where, you know, a couple entrepreneurs with the clever climate tech idea could go and raise a seed or a series A like there was no market. And so what we were able to do is we were able to convince some big private equity, energy investors to basically go earlier and to do more venture type investing but with the promise of, you know, a lot of scale down the road and a risk profile that would kind of fit theirs in the future. So that was the first kind of chunk of capital, which let us really prove out the business model, acquire technology, prove it at pilot scale and then move into more traditional private equity investing with kind of no longer binary risks at the table, but scale and the potential to have a lot of scale.
So it wasn't a lot of private equity groups doing it back then, but there was a couple Warburg Pincus and AZMO capital management. And, and I think there leaders in the space because of it, and, and now that you're seeing a lot more climate tech investing and especially that growth stage of climate tech investing they're really well positioned to be able to do that. So that was kind of the first stage. And then, and then we brought in some strategics. And so recently we added NextEra SK and Mitsubishi Heavy to the capital table, as well as another private equity to group Cornell capital, and a few others.
That was really about now tooling the company, not just purely the financial side, but also kinda the operation side. So that, that wasn't just capital. It was also capital in each case with someone that's got some intelligence and kinda history in this space, you know, NextEra biggest wood and solar producer, which is our number one input in the case of SK and Mitsubishi, kind of leading companies from two of the countries that are really leaning forward on hydrogen. And, and also in the case of Mitsubishi Heavy, really strong technology development company.
Jigar Shah: You know, I mean for what it's worth, I mean, that's sort of how I built SunEdison and Generate Capital too, right? We never used venture capital and for good reason, right? 'Cause venture capital generally has shorter time horizons where, you know, you're investing in 15 year exits with, you know, five year money and it causes weird wonky board dynamics and all sorts of other issues, right? And so there's certainly a role for venture capital to play. And I also think that venture capital has done a good job of some of the newer funds actually have longer mandates than five years now, but for infrastructure, I think it's really hard unless you're basically planning on stacking after five years and providing those venture investors and exits so that you can recycle their capital back out and bring in long term investors then it's highly risky and, you know, causes a lot more friction, I think between the founders and the capital providers.
Jason Jacobs: Yeah. Jigar, one thing that we spent a bunch of time early on at the company, you know, making sure that our valuation curve was reasonable for the progress we've made on the business, not just which one check can you go and find that's willing to, you know, wanna get into the space and write you some huge valuation. And I think that's really important 'cause over the course of a decade, these type of businesses build with kind of continuing increasing valuations, but they're not parabolic. And when you kinda put a parabolic valuation step in there, just because the market allows for it, you don't set yourself well up for the long term, it kinda better be the last capital you ever need.
Jigar Shah: Well, and it never is right. That's the key. It never is the last capital you ever need. And what ends up happening is you screw yourself around being able to compensate senior executives because now you have to compensate them with highly inflated stock. You know, if you do that and it makes it really hard to raise equity, if your stock price goes down right? Then you have a down round, which nobody loves to be a part of. Right. And so when you think about what we're talking about here is we're talking about trillion dollar scale in every single vertical we're talking about trillion dollar scale. And so if you're not thinking trillion dollar scale, then you're not really planning for the long term.
Jason Jacobs: And Rob, you mentioned that it was private equity that was doing the early equity capital. And then more recently you brought in the strategics, what is it that led you to the government and to Jigars group? Did, did you explore the project finance firms? Did you explore the commercial banks? Did you explore, you know, whether it, it might be a, another type of capital from the big PE firms with deep pockets that you, that you already worked with or, or the strategics, or did you know, from the outset that working with the government was the best fit? Like how did you think about that and, and how did you how'd you get to Jigars office to begin with?
Rob Hanson: Yeah, we definitely looked at all different sources of capital and you could, you, you know, commercial project finance, you could do, like I was saying, just try and do it all on equity, whether that was going public or, you know, some of the big growth investors that have entered the space. But like I said, I grew up in kind of Cleantech 1.0 and I mean, I saw what the DOE loan did to Tesla. Right? And I saw what it did to some other companies during that time. And I always had a lot of respect for the program because I think it sits in that valley of death for these type of companies, which is getting your first world scale facility financed and built, but it does it in a way that can lead to repeatability.
And so, you know, for our technology, for example, if, if we wanted to replace kinda just the carbon of the business, the carbon black side of the business, we'd have to build hundreds of plants. If we wanna make a dent in, you know, cleaning up existing hydrogen production, it's thousands of plants. If we wanna play in the, you know, potential new hydrogen markets, it's tens of thousands of plants. And so what I've always loved about the LPO is it sets you on a course to be bridging towards doing repeatable project finances like you have seen in wind and solar. And that's what attracted us.
Jason Jacobs: Now, Ji, before we talk about the work of the LPO, since you've done so many different things in and around climate over the course of your career, maybe talk a bit about what it is that motivated you to end up at the LPO in the first place and how you thought about it relative to the other path that you could have gone, including just staying at, at Generate?
Jigar Shah: Yeah. Well, I definitely would've loved to stay at Generate. I built that company so that I could have retired there. I got, you know, certainly pulled away by the loan programs office because I thought that I could have a bigger impact. I think in general, you know, when you think about my mindset in 2003, when I started SunEdison, you're talking about an academic Simon Erbach who had written extensively papers around how to use the capital asset pricing model, which had been around since the 70s around pricing energy deals, right?
And in the 90s LS power, AEs, Calpine, all these folks who were doing, you know, PURPA deals, you know, public, you know, utilities reform policy Act, gosh, I'll probably mess that up. They were doing PPAs for coal plants, right? And their cost of capital for that plus peaker plants for natural gas and other things were always the same, you know, basically 10, 12, 13% interest and you know, rates of return. And then you've got leverage and all these other things. And, and when I was going in the marketplace for solar, people were like, "Great, you know, we have a model for that," right?
You get 20% plus returns on the equity and you get, you know, 5% interest debt and all this other stuff is gonna be great. And I showed them all these white papers from the capital asset pricing model. And they said, "What are you talking about? Like you're gonna pay exactly what, you know, everybody else pays." And I was like, "But I don't have fuel price risk. Like we have very little maintenance. Like I don't know why we would be priced the same way." Right? And there was nobody to go to. Like, I mean, I went to ex DOE folks from the Clinton administration who had set up private equity funds or whatever.
And they all said to me, "Jirgar solar's too risky." This is 2003. Right? And I was like, you know, like, and so now when I'm sitting in 2014 setting up Generate Capital, right. I'm thinking like, "Where do all the people that looked like me in 2003 go, who is supposed to actually hear their pitch?" Right? There is nobody that's supposed to hear their pitch because remember, most people wanna hear, you're gonna make 'em a 100X return or a 10X return right. On the venture capital side. Right?
And when you think about infrastructure investing, if I make you a 2X return over 10 years, that's phenomenal, phenomenal. Right? Who are you gonna to, to pitch a 2X return over 10 years. Right? And get them excited about it. Nobody. And then think about like, so when Generate Capital came in and was helping all these entrepreneurs make a 2X, maybe, you know, we got greedy sometimes maybes a 3X over 10 years, right. That we were asking for. We then turned the debt markets that Generate, right.
`Remember we had $200 million of cash sitting in the bank going to the debt markets. So the debt markets were like, what are you talking about Jigar, battery storage, no way are we gonna do battery storage. This is 2013, by the way. Right And now people are doing merchant deals in Texas with ERCOT and getting like four and a half percent cost capital. Right. But when we were doing it in 2013, 2014, 2015, we had an offtake agreement through stem right at with Southern California, Edison. And folks were like, "Uh, I don't know," remember American was at micro [inaudible 00:24:04].
Like they got a deal from Macquarie. You don't get a deal from Macquarie, unless your stuff is misunderstood. Right? Macquarie's the one you go to if like, you know, TD Bank, Crestmark Huntington, Live Oak like all those easier commercial banks won't do a deal with you. You go to Macquarie. Right? So when I got the chance to go to loan program office and revitalize it, I jumped at it because I was like, "We're not gonna solve climate change. There's no way to get to 2035 and 2050, unless you solve this part of the supply chain of capital." Right. And it's clearly, isn't something that's solved today.
Rob Hanson: Like I don't think you could have picked someone with better experience to lead LPO than Jigar. And so like when, when I heard that you got nominated, I mean, we had an application in process and like I was high fiving, my CFO [laughing] being like, we got the right. And, and it's because one, you built a company in this space and then two, it generate you kinda fit into that, into that gap in the market. And I couldn't agree more like we're gonna need to deploy hundreds of billions, maybe trillions of dollars of infrastructure each year to actually rebuild the world's kind of energy infrastructure.
And that's gonna require companies to figure out how to actually pull off these asset level financing's. And I just think there's not enough people really talking about this in the climate space. And so it's, it's exciting for us to be kind of the first with kind of Jigars new leadership at the LPO, but we can't be the last right? I think the last time I was on your podcast, Jason, and saying like, "We need a hundred or a thousand modelist with over the next 10 years to be getting through these kind of last valleys of death and, and sitting out there like the success stories from wind and solar that are knocking out multiple billion dollar assets each year.
And so I think, you know, we got a shot at it now with Jigar and the team he's pulled together, you know, maybe we can get there. Maybe we can start doing five, 10 of these type of first of a kind projects that then lead to hundreds more.
Jason Jacobs: And maybe just to double click on LPO and generate Jigar. If I'm running a company, what is the type of company and what is the type of project that would be a fit for generate and then same question and for LPO?
Jigar Shah: Well, I had to sell all my Generate stock to take the job. So I don't think I can talk much about Generate. So I think you'd have to ask, Generate about it. But I think that-
Jason Jacobs: Can, can you talk about it from the time that you were there?
Jigar Shah: Probably not, [laughs] but what I, I guess what I would say is that what Generate represented was a smaller equity check, right? The, the very largest infrastructure players, right? Like Macquarie or Stonepeak, or some of these other big players, they really like a 200 million dollar check. Warburg Pincus I guess is similar. Right. They've decided to come smaller and, and grow bigger, but like, but they really wanted 200 million dollar check, right? TPG rise. Some of these other big players.
Jason Jacobs: These are equity checks, right?
Jigar Shah: Yeah. These are equity checks, right. [laughs] That's not even the asset value, that's the equity part of the asset. And so when you think about what we've done in America broadly is since the 1970s we've invested in R and D, that makes small beautiful, right? So like the iPhone in my hand, right? Is more powerful than all the computers that took to put a person on the moon.
And so when you think about what we've done is we've figured out how to shrink wastewater treatment plants, we've figured out how to shrink methane paralysis units. Right? We've figured out how to shrink all sorts of infrastructure. And so there really needs to be someone who's writing a $20 million equity check into these spaces. And there needs to be somebody who's writing as little as a hundred million dollar check in the debt spaces. Right? Which is where we're at.
And so, so I think that when you think about where LPO and or Generate fit in before, you know, the other thing I would say is that there needs to be somebody who takes every phone call, right? And doesn't say, "Well, I'm busy or I've got 77 active applicants in the loan programs office queue right now. So come back to me in six months when I'm less busy,? Right?
There needs to be somebody who takes every phone call, right? Because from that perspective of that entrepreneur, right? This is the most important moment in their life, right? Figuring out how to solve this problem is super important to them. Right? And so are gonna motivate these folks to continue to bust their hump and take all the sacrifices necessary to really be able to bring these solutions to gigaton scale. Someone's gotta take that phone call and not just take the phone call, but be serious about, you know, engaging the 10,000 engineer scientists and experts on DOE's platform to weigh in on whether their technology's gonna work. Right?
Weigh in on all of the different things that the entrepreneur needs to get to the next level of market acceptance. And so that feature is one of the things that we're building a lot at the loan programs office is really customer service and making sure that every single person who has enough credibility to like, you know, spell their emails correctly and, you know, write up an application correctly and do the things that they need to do to show that they're professional on their side. They get the time of day on our side.
Jason Jacobs: Now you're saying that you're building a place that will take every phone call, but on [inaudible 00:29:47] podcast, for example, I think the term you used was that people want a fairy godmother, and that's not us. Can you explain? I'm just trying to get my, my brain around, like, is this for people who capital's not available in other places or, or is this for people that, you know, could go get it from a commercial bank, but are choosing to work with the DOE and the LPO, because it's a more compelling option. Like, do you compete with market based capital or how do you measure success? Like where does profit fit into this, is it purely mission? Is it like governmental duty or yeah.
Jigar Shah: Yeah, no, it's a good set of questions. I mean, Rob probably could answer it better than I can. I mean, in general, I would suggest to you that no one in their right mind would go through our process, even as efficient as we've made it in the last six months, if they could just go to commercial and get debt. Right? And so we are not competing with commercial debt. If people can go through a commercial debt process, they will always prefer to go through a commercial debt process.
Rob Hanson: I think I agree with, with one exception, which when we thought about debt, we thought about four components. You've got number one, the cost of the money, right? So that's any bank has the cost of money. Number two, they've got the cost of running the bank. So they're overhead. And that rolls into the interest rate. Number three, they price the risk. And then number four, they take a profit on that.
So those are the four kind of parts of a debt deal. Look, if you look at the DOE and compare it to commercial bank cost the money's basically the same cost to run the bank. Let's say roughly the same, maybe DOE LPO is a little bit cheaper. Price the risk. DOE set up really well to price the risk of these first ones. Like Jigar said, 10,000 kinda engineer, scientist experts.
They're willing to do that deep technical market risk assessment to come up with what is actually the price of that risk. And sometimes that's where you bump into it, especially on these first ones. It's, it's not that the price is too high. It's that no one will actually give you a price. They're just like, I can't do the deal. It's, it's unpriceable so that's a differentiator I think that the DOE has.
And then the last one is the profit and that's where there is no profit. So it's, it's not that this is this subsidy it's that the government of course is going to get paid back with interest as their cost of money was and cover all of their overhead and price in the risk of default across the portfolio. So that, you know, of course some loans will fail. It's a portfolio, but then there's not a profit mo- motive on top of that, which you would have in a commercial bank. So that was for us, it was the kind of nonprofit aspect of it. And also the ability to actually price the risk.
Jigar Shah: Yeah. I totally agree with that, Rob, but I think it, I think it leads you to the same place, which is that the only people in the Venn diagram, which doesn't get covered by our statements or the folks who are over optimizers. So you could imagine someone saying, "I'm willing to spend the extra 12 months to get through your process sugar, because I wanna save 42 basis points on the loan," and we have an additionality requirement there. And so we would never provide them alone if we knew that they could go to a commercial bank and just get a loan. And we're just, they're just trying to get 42 basis points, but we wouldn't do that.
So we can't, we, we can't be competing with commercial banks, right? For no other reason than like that it would take resources and, you know, both time and, you know, authority that we have away from more needy applicants, which to me is unconscionable, right? Like for somebody to be so selfish and greedy to like take those resources away from someone who's more who needs it to create additionality, you know, seems like the wrong thing to be optimizing for. I apologize. Jason, what were the other subparts of your question that I missed?
Jason Jacobs: In terms of the mandate how do you measure success?
Jigar Shah: Oh, well, I mean, I think we measure success by, as Rob suggested, right? We need hundreds of Monoliths to be successful, hundreds of Teslas to be successful. Right? And so I think what we're measuring as success is that we're setting these folks up for future success, right? Like I can't predict that every single loan applicant and group that we provide a conditional commitment to is gonna have that level of success. But I can say to you that without that level of risk taking and that level of entrepreneurship, we are definitely not gonna have success.
There are many, many sectors that we have mapped out of the department of energy and the international energy agency where the technologies exist, right? To be able to reach gigaton scale savings. Remember Rob's, you know, company didn't invent this technology, this in technology was, was already in existence and the previous entrepreneurs had failed to bring it to market. Rob's group of course has brought a lot of incremental innovation to the process.
And so they are an innovative company, but the fundamental science behind what he did was really the already there. And it was really his [inaudible 00:34:59], that's brought it to the point that it's at today. And I think that there is a level of recognition at the department of energy that, that without finding those people who are genuinely willing to risk it all to get to this point, that all the policy in the world and all the R and D in the world, all of which is hugely important is just not gonna get to the at gigaton scale carbon reductions.
And so a lot of what LPO needs to achieve and that I'm very passionate about is making sure that DOE and the rest of government understand how valuable those entrepreneurs are. Even though sometimes they can be a pain and sometimes they are not appreciative of what we we've done. Um, fine, but the role that they play is hugely important and something that everyone needs to appreciate. But two, that our office needs to be accessible to them because some of them are extraordinary at raising equity because they're forward looking people and they can sell the dream, but they are terrible at raising commercial debt because they can't be bothered to spend five minutes thinking about it and, and spending their brain power on it, right?
It's not that they're not capable of understanding it, but they don't want to understand it. And so then they can't raise it and because they can't raise it, their weighted average cost of capital is too high and they can't get to the other side of what they wanna accomplish. And so we have to recognize that those people are coming to our office and be a little less judgey and a lot more supportive that we can get them through our office and onto, you know, the next stage of American greatness.
Jason Jacobs: So with those 10,000 engineers, what type of risk that they uncover are you okay with and what type of risk is a flag or a, a show stopper?
Jigar Shah: Well, I don't know that any risks are not necessarily a show stopper. I mean, certainly if, if the technology genuinely has binary risk, right? Which is like, I don't know if it's gonna work, maybe it'll work, maybe it won't. Then it needs to go get kicked back to the office of clean energy demonstration. And they need to get a grant, which they match with equity dollars to actually demonstrate the technology. So that I, I guess is a, is an off the table risk, but the rest of the risks, I mean, you know, I have this heat map that I show our credit review board and every heat map, it's got like 11 variables.
Every one of them has some red and some, you know, blue or green, right? And you know, my credit review board asks me like, "Hey, Jigar , like, there's a couple of red patches are we gonna fix them?" I'm like, "No, like if they didn't have any red patches, they'd just go to a commercial bank and get debt." Right? Like by definition, every single group that comes into our office has a red patch. Right.
Like that is what makes them eligible for our office. Right? Like, and so we have to price that risk in as Rob suggested. Right? That doesn't mean that we should look past it. We're not gonna give them a pass on it, but we do have to price the risk in, and then we have to actually issue them a term sheet. Right? And so, but the one thing we won't do out our office is take, will the technology work risk because that's not something that we're supposed to be taking. Right? That's something that the office of energy demonstration should take or other groups within DOE.
Jason Jacobs: So just ballpark, what percentage of, I mean, you mentioned, I forget if it was 70 or 80 or 90, but the current outstanding applications, what percentage of those will be approved?
Jigar Shah: Well, we have hundreds of applications that are, you know, in conversations pre consultations, and we have 77 that have actually taken the effort to submit an application. Right. Which is no small fee. There's a lot of paperwork involved for our office. [laughs] I'd say that one third of those applicants are prepared to get through the office the first time through, within six to eight months. Right? Like they're prepared to be on the fast track, meaning that every single variable that we need and every question that we have can be answered in a timely fashion, and they've got like professional advisors and they can really just get through the process.
And then I'd say another third of the projects basically have homework to do, right? So we got through the first stage of diligence. We asked them some tough questions and they said, "Actually, we need a year to go back and solve those questions, right? And come back." We hadn't been prioritizing making that, you know, something on our roadmap to solve. And so now that we know that that's a long pull in the tent for you, we'll go back and do it and come back to you.
And then the last third of folks realize things about their application that may make them permanently defective to the loan programs office. So they may just withdraw their application. And some of them actually just need two to three, three years to solve the problems that we, that we identified. So, I mean, that's probably the breakdown. I probably expect that breakdown, you know, well into the future.
Jason Jacobs: And Jigar, you made one comment on Shayle's podcast and I'm gonna actually address my question to Rob first, but the comment was something to the effect of how most early stage companies aren't well equipped, to their detriment, to work with government. Before I ask Rob the question, did I get that the gist of that comment right?
Jigar Shah: You, you did? And let me just add one answer there, because you also mentioned the Cinderella comment that I made previously, and I forgot to answer that. So that answer to that question, and this answer to this question is just about seriousness, right? Like there's a level of seriousness that people have to take. So if someone shows up in rags, which basically to me means they basically just submitted a, you know, a stream of consciousness, email to me saying, "Can you please help me?"
You know, I'm just like, look, if you're not gonna put in the effort, then we don't have to put in the effort on our side, right? There's some level of effort that you need to put in around assembling your thoughts into a coherent fashion and thinking through somewhere 360 degree point of view, how your project may operate. And if you're not willing to put that level of basic effort in, it's pretty hard to expect the government to basically just take these scraps of paper that you sent me and actually turn it into something for you.
Jason Jacobs: Thank you for clarifying. Now, Rob, as an entrepreneur who has never built a company that worked with the government, when I hear you talk about, I mean, look, you know, conditional commit that starts with a B and look what it did for Tesla and DOE and access to these army of engineers and, you know, deep pockets and patients. And I mean, it sounds like a care queen maker kind of event, which is a big deal, but given how serious you need to be and how much resource on your side is required to quote unquote, come prepared for the process.
If you come in at the wrong timing, it sounds a bit like quicksand. So I'd love for you to maybe just talk a about how you thought about that, how much resource it did take and also timing, and whether there is such a thing as, as, too early and, and what advice you have for entrepreneurs in your shoes for how to think about their own timing for when and how much to resource towards government as Jigars suggesting?
Rob Hanson: All right, I'm, I'm gonna try, try my hardest, not to get into trouble, 'cause I'm gonna start talking about where I see the government's role and where I don't see its role in solving climate change.
Jigar Shah: You can say whatever Rob you won't get in trouble it's, it's your, your truth.
Jason Jacobs: We can't see Jigars fingers, but they might be crossed Rob, just so you know.
Rob Hanson: I'm more worried about your audience, maybe than, than Jigar. So look, I think private industry entrepreneurship needs to bring solutions for us to basically rebuild the world's infrastructure with one that's high energy and low emission. I think government has a very important role in that, but it's not the entirety of the role. So there's this, this balancing act. For us, the important thing is we could never have our company like say our unit economics, the fundamental of what we do be skewed by say government incentive.
And so we actually, for the first 10 years of the company, didn't take a single dollar of R and D grant of, you know, RPE money. I mean, I think highly of these programs, I think that they're necessary, but for us, our kind of world view was our business needs to be able to kinda stand alone on its unit economics, to be able to have the huge impact that we're having. Now where the government does fit in, I think is a program like LPO where it's providing a very good fix to I think a bit of a market breakdown in the sense of, it's very hard to get that risk priced for the first commercial debt deal.
And so they fit in perfectly there it's like a liquidity instrument. And I think now you get this private public partnership in the right way, where if it's successful now you've got a repeatable business model. You can go to the commercial banks to this massive, you know, wall of infrastructure dollars out there. And you're not asking them to do something different. You're not saying, "Hey, the last plant I built with a billion dollar grant and now I want you to give me a billion dollar loan."
It's like, "Hey, the last plant was built with a billion dollar loan. Here were the terms. Can you do the next one? Can you do the next 10?" So that's kinda where it all fit together for us. And that's why we just leaned so hard into the LPOS because it like fit into our DNA of how you build a successful climate tech company that can truly scale to like Jigar said, those gigaton scales.
Jason Jacobs: Jigar , anything to add?
Jigar Shah: The one thing I would say is that I don't think that every business concept has the ability to get a trillion dollar market cap. Right? And so I think when you have companies that have that much potential like Tesla or like Monolith or others, then it is, I wouldn't say easier, I'd say a more straightforward approach to be able to get private sector funding for each and every stage of their development. But I think there are lots of sectors like nuclear or geothermal or how hydro, for instance, where I don't see trillion dollar valuation companies coming out of there, I see more like billion dollar stage companies out there, which is great.
I mean, billion dollar valuation companies is, is still great. And so, but they, I think do need more assistance with the earlier stages of proving their technology out from DOE because without that, they can't actually go out and raise the next round of capital from private sector investors, 'cause they're not willing to take the risk that, you know, the fundamental concept fails.
And so there's a role depending on the sector for each stage of Doe's, you know, product offerings. But the goal for us is not to be the smartest people in the room. But the goal for us is to feature the entrepreneurs as the smartest people are in the room and then, and then try to serve them and their costs. Right? And we're gonna have more tolerance for failure, you know, at each stage. And so we're gonna have to make sure that, that you know, that we're taking a sufficient amount of risk to make sure that you know, that we're really supporting innovation and next generation product development.
Jason Jacobs: And my next topic area, I'm really excited to delve into with each of your perspectives individually here, because they're, they're both just so relevant for this next set of questions, but Jigar in the past, I've picked up from you. I don't know if it's frustration or disgust or, but early stage venture, just traditional venture capital. You've talked about misaligned incentives. You've talked about how they don't understand. How to think about government, how to, how to think about debt and then Rob, you essentially just skipped those early stage VCs, I mean private equity to play that capital role for Monolith.
And, and so I just wanna unpack that a little bit because Jigar, you mentioned to me before we started recording today, that one of your hopes was that, you know, they just don't understand. So let's educate, but I guess what I can't help, but, but feel is, is education gonna help or is it just misalignment where early stage VC should do a early stage VC does, which should not be deep tech. And if I'm an aspiring deep tech founder, like what Rob was before he made his choices on early stage equity. I should just skip Sandhill road. Like, is that the takeaway or I'd love to hear each of your perspectives on, on that general topic?
Jigar Shah: Well, I mean, I guess what I could say is that the misalignment of incentives is the problem. It's not the actual investor, that's the problem, right? Or the existence of the money or the need for the money that's the problem. Right? And so, so I'm fine with deep tech companies saying, "Hey, we're gonna raise a million dollar precede round and you know, use it to like verify our concepts and do a, a big computer market simulation to make sure that this thing actually works or whatever it is that they're gonna do with that early stage money, I think that's fine." But there needs to be an understanding on both parties part as to what it is that the exit's gonna look like.
And so that they don't have these massive arguments two and a half years from now, right? Like we had these issues when we started Generate, right? Like there were a lot of time limited money that wanted to come into Generate. And I was saying to them multiple times, like, "We're not promising you dividend yields and an exit anytime soon." Like it may never make sense for us to go public or spec. Right. And so if we decide that it's not the right time to do this, and we need another couple years of seasoning our portfolio before we can get, you know, debt raised against the portfolio, such that we can recycle some of the capital, like we're gonna do that and we're gonna do what's best for the business and all the customers that we're serving. Right.
And so we can't like be forced to make suboptimal decisions as a company based on your, you know, timing with your LPs. Right? And I think that like a lot of early stage venture capital providers like nod and say yes, but then don't understand that their own like restrictions that they're operating under. Right?
Jason Jacobs: How does education help that it sounds like structural changes needed or it's just fundamentally misaligned, like why even bother with the education, if the misaligned incentives aren't gonna go away?
Jigar Shah: Well, there are plenty of pre-seed funds that have come up now saying that they have 10 to 15 year time prices and they put it into their, their decks, right. And their documents. Right? So that to me is a recognition by them that if they really want to play in this space, that they need to set the boundaries with their LPs in ways that are aligning with the entrepreneurs that they're funding. Rob, why don't you like get in on this? You, you have more to say probably than me.
Rob Hanson: I think breakthrough's doing a good job. And I think a differentiator, yes there's the timeline and incentives. But I also think it's the makeup of the people. And so in some ways like Silicon Valley is a victim of its most recent success, which was building trillion dollar scale, traditional tech companies, you know, Google, Facebook, et cetera, et cetera. And so then you get this model of, well, it worked, I'm gonna apply that again. And I mean, that was Cleantech 1.0, right?
It, it just flamed out famously. And I think you still have some of that going on in some of these funds where they didn't really get that, actually, it's very different to build the climate tech, especially deep tech than it is to build these other types of businesses. Now that said, there's some people that have figured it out in the early stage, I think it's for me less about like the stage of capital and, you know, dollars and return profiles required and risk tolerance and more like, "Where did these people come from? How do they think?"
And you know, you get amusing breakthrough as an example, but I mean, they're technic rats, right? Like they're deep technical experts. They understand how you actually actually build kind of technology of this kind of complexity. They also typically have experience in the end markets and have seen maybe not in a startup world, but in like a corporate development world, what it's taken to bring a new chemistry or energy primary technology to the market. So that's where I, I, I would say the broken part is the, make everything look like software and apply principles that are very successful in enterprise software, but aren't gonna be successful in, in deep tech, climate tech.
Jigar Shah: Yeah. And the, one of the thing that I'd add there is that I totally agree with Rob is that, is that these entrepreneurs need help. And so like, how do you be more than money? Right. Cause the money's fine. I get it. Right. But like, they actually need help with identifying strategics that, you know, have some way of appending on their business or like, you know, figuring out how to navigate some of the corporate VC world or, you know, figuring out how to get advisors and filling in some of those key positions in their company. Right?
Because I mean, a lot of the VCs that I've worked with in the past, for instance, don't, I mean, they, most recently some of them do now, but like, I'd say three years ago, or four years ago, didn't actually know how to find CFOs that understood how to work with commercial debt.
Rob Hanson: Yeah. And Jigar, just to pick up on that. I mean, so Warburg's been great for us in this respect. They brought in early a guy named Henry Kressel, who's a partner there. Henry's in his 80, he was at Bell Labs for 30 years, you know, invented, you know, much of what has become the solar industry. And he got it like, and we still talked to him every two weeks and he, he just got it right from the start, what this type of technology, similarly, you know, in that case, Warburg introduced us to our CFO.
They'd worked with him before. And I think that's why we navigated the LPO process a little bit better as our CFO, Tim, you know, he's done many, many multi-billion dollar big energy deals with complicated input outputs, you know, big assets EPC. And so it's investors whose DNA is building asset heavy companies. I think you get that lift as an entrepreneur where they see where you're blind and then the best ones, you know, insert resources to help you be successful in those areas.
Jason Jacobs: Now, if I am, let's say I'm a managing partner of a traditional early stage venture firm that has historically done software and I've done very well personally. The fund's done very well. I can't help, but notice these big systemic problems in society. I want to use my perch for good. What advice do you have f- for that person? Should they, if they're gonna try to do more in this area, should they stay in their lane? Should they leave and not try to do it within the co- context of where they already are and, and have been like, what do they do? Is there help helpful or are they just gonna make a mess and lose a bunch of money for their LPS?
Jigar Shah: Well, let me answer the question in a slightly different way. I think we should actually ask the question from the perspective of what do we need to accomplish to be able to solve climate change. Right. 'Cause I don't know that I care frankly, about the people that you're referring to. Right? Like they can participate, not participate if they do participate great. If they don't fine. If they lose money for LPs or make money for LPs again, like doesn't matter to me, like what matters to me is whether we solve climate change, right?
And so the question becomes, how do we solve climate change? And I think that all of these players from venture capital to private of equity, to, you know, the best and brightest CFO candidates to LPO and the functions that we provide to others play a role. And the thing that I find the most, I guess, frustrating at this moment in time is that there is a plan and very few people understand it.
And I think what we to do is to figure that out, because when you think about what the plan was for Tesla or for lithium ion batteries, or for solar and wind, there were a number of pieces to this. LPO played a prominent role in all of those, but also you had tax credits passed by the Congress. You had venture capitalist and others that were part of those companies, success stories, et cetera.
And when you think about how we did that, that's basically, you know, first of a kind deployment, which is what LPO played a big role in, in all those sectors. You had second through fifth deployments as well. You then had learning curve, right? The six or seven cumulative doublings ups to actually get that down. And that included state governments, right? So we had like 10 mandates, right? Renewable portfolio standards that mandated this stuff.
You had tax credits like the tax credits for $7,500 for the first 200,000 Teslas that were sold and Chevy Bolts and, and those that were sold. And then you had market acceptance. Remember it wasn't until 2019 that Tesla was even close to bankable in a vehicle loan. You could not go to your local bank and get a loan for a Tesla, unless you guaranteed it like a credit card loan. Right?
And so, and that basically changed universally across all of the banks last year, 2021, right. 2019 Bank of America had that deal with Tesla. But then there was some like sort of support from Tesla to get that to happen. And so when you think about what we're trying to accomplish, it's getting $2 trillion mainstream capital markets, which the solar and wind industry didn't achieve until 2018, 2019, I would say then Tesla, right? We just talked about lithium I and battery storage was basically unbankable in 2014 and now like is fully bankable.
And so I think that this is a formula and we can replicate this formula with carbon black and hydrogen producers like Rob and Monolith materials. We can replicate it in sustainable aviation fuels. We can replicate it in nuclear. We can replicate it in geothermal and all the other sectors. But instead I think the vast majority of players that I talk to from venture capitalists to others, think that we're all just throwing a bunch of crap against the wall and seeing what sticks and that it's like random, which ones are gonna be successful and it's everything, but random, it's actually very scientific on how you get there.
And Rob has been fall following that playbook for 10 years. And I think people still think, well, his success is random. I was like, it's not random. Like [laughs] there's actually a right way to do this. And America is better at it than Germany, Canada and the rest of the world. And instead we have a lot of self hatred for our commercialization strategies in this country and we should stop that. We're actually really good at it.
Rob Hanson: Yeah. I mean, we're like case in point, right? I just became an American six months ago. So I'm an immigrant and-
Jason Jacobs: Congrats.
Rob Hanson: The, yeah, thank you. Thank you. The basis of our technology. I mean, we acquired technology from a Norwegian company and a French university, and then we built the team, you know, in Silicon Valley and it's, it is something we're really good at as a country. And I maybe have a little bit different lens because I did come from the outside and I came from the outside, like really close to the same perspectives, 'cause it's not like Canada's that much different, but it is different in the sense of like the US is really great at innovation and entrepreneurship. And so adjacent to your question, I mean, I think we need more companies, right? And I think the US should lead the world in creating the next generation of climate tech companies.
But like Jigar said, this isn't a sprain prey. This is a highly engineered, very thoughtful. Most of these technologies will have long histories, many cases that extend back decades. But there's something about the context of the world today, whether it's raw commodity prices or externalities being priced in that all of a sudden make these things, you know, viable. And so, I mean, maybe that's some of the role is not just like writing super early stage checks, but trying to build what we have in traditional technology from a kinda climate of how you get all of these companies to be founded and want to be founded and in the right way. Maybe there's a role, a role to be played there by some of this early stage capital that's forming.
Jason Jacobs: So I mean, it, it sounds like we're diagnosing a problem that it sounds like both of you are aligned around exists and that's that there is a playbook, as he said, and we're better are at it than we think. And you know, we know which technologies to pursue. And, and yet a lot of the investors and entrepreneurs look at it as random. I guess I have two natural questions that come out of that. One is how do we fix it?
Any tangible suggestions for what we can do to make it better and to help foster an environment where more Monolith bloom in the areas that we need the most and, and secondarily, are there examples of people or entities or companies or accelerators or whatever who, who are doing it right that people, you know, like me or others could look to for inspiration?
Jigar Shah: Well, I think there's a lot of people doing it. Right, right. I mean, that's why America's doing so well. The thing that I think is problematic is what we choose to focus on, right? In general, I'd say the vast majority of the press releases in the spaces, this person raised a C round, this person raised a D round. This person backed, right? This person is now worth a billion dollars, right? This person's airplane is being tracked by a Twitter account?
And instead we need to start talking about what it means for a piece of infrastructure to last for 50 years. What does it take to actually do that? Right. And how do you train people with vocational training to do that? What role do unions play or not play? Right? What are the roles of local towns? Right. Like, you know, I mean, I think that there are a hundred thousand people in this country who actually keep everything running, right?
There are senior managers who make sure your wastewater treatment plant delivers clean water to your tap. And nobody even knows their name or even cares to bother whether there's like a board who manages them or how they issue bonds or how they deal with PFAS. Right? That's the latest tour de Azure of, you know, what people are mad at them about. Right? And there's lots of stuff out there. Right. And there's lots of technology that solves that problem, et cetera.
But like, I mean, when you look at your podcast, for instance, which is extraordinary and reaches out to a lot of these people, there isn't a lot of content on that. Right? Which is like, if an airport wanted to use sustainable aviation fuel, how would it do that? Who actually even makes a decision? Is it the mayor that makes a decision? Is it the governor? Oh no, it's an airport authority that's separate from all of those things. Right?
And like, how are they governed? Right? You know, what happens to the payments that come off of our ticket for the TSA precheck thing? Like where does that money even go? But those dollars are in the trillions. Right? And they are so much bigger than all of the other dollars that we hear about in these press releases every week around how much money someone raised in their, A round or B round or Pre C round. But that content doesn't show up anywhere.
It doesn't show up on E&E News. It doesn't show up on Canary Media, which is probably the best of all of them. It doesn't show up on almost any of these things because like, people are like, well, but I wanna know how much money they all made. I don't know that I actually care the, about the underlying dynamics of the industry and you know how that works, but you know, if we're gonna solve climate change, people wanna know that they can live a modern lifestyle without a lot of sacrifice through these technologies. And that story is not one that's clear to anybody.
Jason Jacobs: I wanna just take a minute and, and digest that. I think that's a key point I'm excited to, for people to hear it. And I'm excited to see the, the brainstorming that comes out of that listening as well, because I think that's a different perspective than, than we have heard often on the pod. And, and immediately I, my, my [inaudible 01:04:19] start firing about, you know, we could do this or we could do that, but Rob, why don't, why don't I give you the mic for a minute? What, what's your reaction to what Jigar just said?
Rob Hanson: Yeah. I mean, I've been starting to sense over the last couple of years, this like incredible opportunity we have with the energy transition. And I, I guess it's, it's ultimately like an equity and a focus on the US specifically, but I think there's a real opportunity to not have, you know, all of the kind of wins and chips pile up in front of just a few people. And I think that's because of what Jigar was saying is like take the narrow case of Monolith. We, we build this large plant, it's gonna require several hundred people to operate at 24/7. And this is like far from easy, simple work.
This is super complex, you know, highly trained long term work. And so it's, it's kind of a different slate of jobs that, you know, the country has lost a lot of over the past decades. So I'm super excited about that, where we're, we're back in like the infrastructure world rebuilding our infrastructure, and that's gonna take tons of jobs. And that's an opportunity for us and like getting more of the focus on that, you know, focusing on not just how you get the company to its first asset and then the, you know, IPO valuation, but instead, okay, now it means that you've got a thousand total employees of which 300 are highly skilled.
You're retooling community colleges and university programs in the region. You're kind of rebuilding other infrastructure, 'cause people gotta get their day and night. You probably have to build another fire station, you know, emergency response, hospitals, all this kind of stuff that it's like rebuilding the fabric of society that comes from rebuilding the infrastructure of society and more focus on that would be super exciting as we start to see, you know, some of these real world scale projects actually go into the ground.
Jason Jacobs: I think that's awesome. Yeah. I mean, as I said, I have a lot of thoughts and I think as I reflect in the coming days and weeks, there'll be more thoughts, but I'm especially excited about what happens when the MCJ community hears this discussion. 'Cause I mean, there it's like swarm of bees. I mean, I think it'll generate a lot of exciting dialogue and, and maybe we can do some follow up as well. I mean, I I'd love to keep this discussion going, you know, one, once we hit the stop button on the recording as well, it's opening up my mind and, and introducing a bunch of possibility and stuff to think about. That's really exciting. So thank you.
Rob Hanson: I might just poke the beats one last time, which was any solutions here they just can't cost more like that equity piece. And we're the case in point with ammonia. So our hydrogen converts into ammonia. Ammonia can't cost more. If it costs more, we'll be fine in most parts of the US, but like parts of the world will starve. They won't be able to grow the food they need. And so it's just for us like a very stark reminder of why you've gotta figure out a way to transition all of these industries, but you can't do it at big costs because you'll always have a part of that, uh, market. That's gonna feel that cost increase disproportionately and you're gonna have just an incredible amount of inequality ripple through the system.
Jigar Shah: Yeah. And just two last messages I'd leave you with is one is that we have 1.2 trillion in the bipartisan infrastructure law, 62 billion of it's coming to department of energy. It's more funding than DOE received on an inflation adjusted basis in its entire 40 year, you know, history almost 50 years now. And people should tell us how to spend it. It's amazing to me, how little feedback we get from the private sector and how we should spend it. And we're hiring a thousand people. So if you wanna serve, this is the best time to serve. We have a lot of money and we need a lot of expertise to put it out the door.
Jason Jacobs: So sounds like those are your parting words, Jigar, but last question for you is just how can listeners be helpful?
Jigar Shah: Those are the two big ways, honestly, like we genuinely need to figure out as Rob suggested how to rebuild the world. And that requires, you know, partnership with the government who's in charge of running the world. Right? I know a lot of other folks think that they are, but the, like the people who get blamed-
Jason Jacobs: That was the Miami Twitterati that runs the world. No.
Jigar Shah: Yeah, exactly. But, but when your trash doesn't get picked up or the roads are all blocked up or your water turns brown, right? You don't really go to an entrepreneur to help solve that problem, right? You go to the government. And so there has to be some partnership with the government. And part of that is also bringing in this considerable amount of expertise as you suggest from these successful people, right? And bringing those experts into government so they can bring their expertise and actually change the way government works too.
Jason Jacobs: Rob, how can we be helpful to you in Monolith?
Rob Hanson: Yeah. I'd echo a lot. I mean, we're hiring like crazy. So anyone where the Monolith story kind of resonates check us out. We we'd love to, we'd love to talk. And then yeah, I think this is, this is like the challenge of our lifetime. No one knows exactly how it's gonna go, you know, jig and I are being a little bit controversial intentionally to get people's creative juices flowing.
So I just challenge your audience. Like if you think you've got it all figured out, none of us do. And so really be self reflective. Keep trying to learn because it's, it's gonna be, it's gonna be a long road and five years from now, we'll look back and say, "Man, were we wrong about that?" But if we kind of keep on the process, we've got a, a shot at this. So thank you, Jason. Thank you, Jigar. Appreciate the partnership.
Jason Jacobs: Amazing guys. Thanks again. And thanks for all the work that you both do.
Jigar Shah: My pleasure and I expect a jacket to come in the mail.
Jason Jacobs: [laughing] I'll be way more embarrassing than a jacket, Jigar, whatever it is.
Jigar Shah: [laughs]
Jason Jacobs: Thanks guys.
Jigar Shah: Thanks.
Rob Hanson: See you guys.
Jason Jacobs: Hey, everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at mcjcollective.com. You can also find me on Twitter @jjacobs22. Where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
