Episode 35: Kathy Hannun, Dandelion
Today’s guest is Kathy Hannun, the co-founder & CEO of Dandelion. Originally conceived at X, Alphabet’s innovation lab, Dandelion is now an independent company offering geothermal heating and cooling systems to homeowners, starting in the Northeastern US.
Previously, Kathy was a product manager and Rapid Evaluator at Alphabet's X. Prior to Dandelion, Kathy led a team that created technology to extract carbon dioxide from seawater to create carbon-neutral fuel.
Kathy has been recognized as one of Fast Company's Most Creative People in Business, one of Albany Business Review's 40 under 40, and as a Leader of Tomorrow. Kathy graduated from Stanford with a B.S. in Civil Engineering and M.S. in Computer Science.
Dandelion is a great example of a company taking a big swing at decarbonization while fitting nicely into the traditional venture capital model, so if you are interested in better understanding how that works, make sure to tune in.
Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
In today's episode, we cover:
Founding story of Dandelion
Overview of geothermal and how it works
Its market potential and what has been holding it back
Why now is the right time for it to flourish and how Dandelion plans to make that happen
The process that went into identifying the Dandelion opportunity, and what led to the decision to spin out from X
What utilities like about the approach
The impact Dandelion/geothermal can have @ scale on decarbonization
How special it is that a high impact opportunity like this fits neatly in the venture capital model and timelines
Whether the process to select Dandelion could be repeatable to find other ideas
The pros/cons of launching at X vs independently and how to decide
The magic of finding a solution that makes people’s lives easier while having a meaningful impact
Some key wishes Kathy has for things that would change that would help accelerate the clean energy transition
Some surprising advice Kathy has for people concerned about climate change for how you can help
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Jason Jacobs: 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 guest is Kathy Hannun, a co-founder and CEO of Dandelion, originally conceived of at X Alphabet's Innovation Lab. Dandelion is now an independent company offering geothermal heating and cooling systems to homeowners starting in the Northeastern US. Previously, Kathy was a product manager and rapid evaluator at X and prior to Dandelion, she led a team that created technology to extract carbon dioxide from seawater to create carbon neutral fuel.
Jason Jacobs: We cover a lot in this episode including the founding story of Dandelion, an overview of geothermal and how it works, its market potential and what's been holding it back, why now is the right time for it to flourish. The process that they went through to identify the Dandelion opportunity and what ultimately led to the decision to spin out from X. What utilities like about the approach, the impact that Dandelion and their geothermal solutions can have at scale on decarbonization. Whether this process that they went through could be repeatable and applied to finding other areas that could also be big swings on decarbonization that fit nicely into the venture capital model. We talk about the pros and cons of launching an X versus independently and how aspiring entrepreneurs can decide.
Jason Jacobs: We also talk about some key wishes that Kathy has, four things that if changed would help greatly to accelerate the transition to a decarbonized economy. And finally, Kathy has some surprising advice for people concerned about climate change and how you can help. Without further ado, here's Kathy, welcome to the show.
Kathy Hannun: Thank you for having me.
Jason Jacobs: Thank you for coming. It's nice to be here in person, as well, I've done a couple lately that are using Zencastr remotely, and there's something about just that face to face interaction that's way better, but anyways, psyched. And you, and Dan Yates, two are closely together, who was a guest a couple months ago as well.
Kathy Hannun: That's right. He's the executive chairman of Dandelion.
Jason Jacobs: Nice. And from a distance, I've been a fan and admirer of what you've been building at Dandelion. It's great for the podcast, but selfishly, it's just great to come and spend 45 minutes or an hour getting to know you and the company.
Kathy Hannun: Well yeah, thanks again for coming.
Jason Jacobs: Maybe for starters, maybe just take it from the top. What is Dandelion?
Kathy Hannun: Dandelion exists to make geothermal heating and cooling mainstream. Today, we have hundreds of millions of homeowners in this country and of course, many more throughout the world that heat their homes using fossil fuels like fuel oil, propane, natural gas. This is how most people heat their homes, and it represents a huge segment of emissions, especially in cold climates. And we really don't have a great plan as a society for cleaning those up. So in order to really clean up the emissions associated with buildings, which in New York, it's 25% of total emissions, it's a significant piece, we're going to have to figure out how to take millions of furnaces out of homes and stop burning natural gas and fuel oil, but instead use renewable energy for heating.
Kathy Hannun: And that's what Dandelion is here to do is to really spur that transition and offer an alternative that's renewable, but also really conveniently I think, a much better product and that's the geothermal heating and cooling system.
Jason Jacobs: I think the way that Dan described it to me back when he came on the show was that it was essentially falling in solar playbook, but for in-home geothermal?
Kathy Hannun: Yeah, exactly. Solar has taught us so much because that industry has had to figure out the problem of retrofitting existing homes at scale, and that's similar to what we have to do. I would say another analogy I would draw is electric cars in the sense that cars also represent millions of point source emissions where people are burning gasoline and electric cars allow us to shift that to electricity so that we can clean up that sector.
Jason Jacobs: I was doing some prep for this interview and geothermal's not what I thought.
Kathy Hannun: Yeah, that's probably a pretty common experience. It's a misconception that geothermal is an overloaded term because we use it to describe the hot rock, electricity generation method using deeper magma, and then we also use it to describe the much less magma heat, just using your yard to heat and cool your home. Same word, very different technologies.
Jason Jacobs: Geothermal, I know it's been around a long time and from an adoption standpoint, it's still pretty small.
Kathy Hannun: I think that is fair to say. It is a tiny industry.
Jason Jacobs: Given that it's got such big potential, what do you think has been holding it back or where is it in its evolution?
Kathy Hannun: I would say there's a few different ways to answer that. And one is, I do think Dandelion benefits tremendously from the solar industry and everything that they've figured out. And so just to give some specific examples, because of solar, we have consumer loan products that allow you to finance product for your home over 20 years with zero money down, so that for homeowners who choose for example to purchase geothermal with loan, they come out cashflow positive. That loan product didn't exist before solar. So we couldn't have offered it and overcome that cost barrier for consumers. Or like our head of operations at Dandelion ran thousands of installers and dozens of warehouses throughout the Northeast and has that experience managing that workforce and handling all of the permitting and logistics and just everything you need to do to manage that scale.
Kathy Hannun: And we're so lucky that we can just take somebody who is trained and grew with the solar industry and then apply it to this problem. And it's fairly recent that you would even be able to do that because the solar industry isn't that old itself. Another reason that I think geothermal hasn't taken off before is to really do it right and to figure it out, you need access to capital because the problems that you have to solve are technical. And what I mean by that is, the thing that differentiates a geothermal system the most from any other heating or cooling system, is you have what we call a ground loop installed in the yard, and it's literally just exchanging heat with the ground.
Jason Jacobs: And it's pulling the energy from the grid, right? Or from another source that's not... I thought geothermal was tapping energy from the ground, but that was the big kind of aha for me is that it was pulling electric or some other power source and then the heat that it's pulling out, it's putting that in the ground, but because it's 50 degrees, then it is more efficient?
Kathy Hannun: Yeah. Let's go through how it works because you're right that geothermal runs on electricity, but it's a type of heat pump and a heat pump is what it sounds like. So it's a pump that pumps heat. In our case, we're pumping heat from the ground into the home to heat the home or from the home into the ground to cool the home. And to do that pumping, you need electricity, but the nice thing about geothermal, the thing that makes it so environmentally friendly and efficient and cost effective is that the amount of electricity you need when, let's say, you're pumping heat from the ground into the home, is much less than the amount of heat you're getting into the home because you're not using that electricity heat, you're using it to move heat, move free renewable heat from the ground into the home.
Jason Jacobs: I think I heard you say on Emily Kirsch's Show that it was four to one ratio?
Kathy Hannun: Yes, it's exactly. So you get, let's call it four units of heat for every one unit of electricity you put into the system. It just allows you to really leverage that electricity to provide a lot of energy to the home.
Jason Jacobs: Is it fair to say then that geothermal is not actually an alternative energy source, but it's taking the energy sources that we already have and making them four times more efficient?
Kathy Hannun: You are using energy that's in the ground, thermal energy, you're just moving it into the house. So I think that you could say both. It is an alternative energy source in the sense that the renewable thermal energy in the ground is a resource that most homes, they're right on top of it. Here's the thing, almost every home is on top of a vast, almost unlimited reservoir of free thermal energy right beneath it, like eight feet away from it. It just happens to be eight feet down. And so the problem is, homeowners have had no way of accessing that huge reservoir of energy to heat the home in the past because installing a ground loop is not a common thing these days. And what we're really trying to do is invent the technology to make it really easy just to put a ground loop in the ground, all of a sudden the house has access to that huge reservoir of energy and it can heat and cool very, very, very efficiently without needing natural gas or fuel oil or any other fossil fuel.
Jason Jacobs: It sounds like on the financing side, you mentioned solar as a place that you can borrow from, and then on the installation side, are you inventing new or are you borrowing from someplace there?
Kathy Hannun: Installing that ground loop, it is the key thing I think for us to figure out in order to really make geothermal take off. And what we've done is we've really surveyed the drilling technology landscape, and because of the fracking revolution and the billions and probably trillions of dollars that have poured into oil and gas, drilling technology is a very well invested in space. So there's been a lot of innovation in that space in the last few decades. So what we've done is we've tried to look at what concepts from that innovation can we apply to this problem, which is actually very different than what you face in oil and gas. In oil and gas, we're talking about drilling equipment the size of a city block that's just drilling thousands or tens of thousands of feet into the ground.
Kathy Hannun: For us, we're talking about a really small, hopefully piece of drilling equipment that is very nimble and can fit in a customer's yard without damaging it and drills at most 500 feet down. It's like a miniature version of the technologies that have been developed for these other sectors. And our task has been to try to take the concepts that we can borrow that will work best in the residential industry and then build a custom drill for geothermal that really facilitates a very fast and easy installation for homeowners.
Jason Jacobs: How long has the in-home geothermal existed?
Kathy Hannun: People have used geothermal for at least a few decades, I think it's a fairly established technology. It's just been so expensive and so cumbersome to install, that only the most wealthy and motivated homeowners have been able to get it. But as a testament to the benefits of the product, environmentalism aside, it's a luxury product because geothermal tends to heat and cool the home very evenly, it's very comfortable, it's very quiet. It's the type of system where people where cost is no object have opted to get it. And I think that that helps us because when you're trying to transition people from a conventional fossil fuel product to a green alternative, you have to make sure that the product that you're offering is actually better and more desirable and cheaper. I think that's the way that we've seen the most successful green products take off.
Jason Jacobs: It's the biggest thing that's been lacking from the existing in-home geothermal, value proposition, pre-Dandelion cost?
Kathy Hannun: I think so. I would say cost is number one and complexity is a close second. So if you, for example, wanted to get solar, but there was no SolarCity and there was no Sunrun, and it meant you had to find a very niche roofer, an electrician and hire them yourself and then manage them to install solar panels on your roof. And somehow, you had to be responsible for reviewing the design and making sure that the quality would be good, it would be a much, much more difficult decision to go solar because you wouldn't have the support to just make that process way simpler.
Jason Jacobs: So it hasn't been mom-and-pop or who?
Kathy Hannun: It has. It's been very small. So it's mom-and-pop, and it tends to just be only a few very specialized companies that do a few installations a year.
Jason Jacobs: And what was the innovation that you stumbled upon that made you believe that you could deliver geothermal in-home far more cost effectively?
Kathy Hannun: When I was working at Google X, my job was to really survey the scene of opportunity in tech innovation and figure out what could we pursue that could have a huge impact on society, build a big business and have technology at its core. And my focus tended to be on energy in the environment. And I think what really captivated me about the geothermal opportunity is the technical barriers in this industry are ones that seemed like the time has come where we have the technology to overcome them. Developing the right drill to use in a residential setting, it shouldn't be as hard as it is today to dig four inch diameter hole, 500 feet deep. That problem hasn't been explored very thoroughly just because there hasn't been the use case. So it just seemed like one where, if you could figure that out.
Kathy Hannun: And then of course they're a bunch of other applications for technology just in the way the heat pump works and how you can use software to simplify the installation process. But you could use those things to really using the renewable energy that's right there next to the house already possible in a way that hasn't been possible before. So I think what was really compelling about that idea and continues to be is just that because hundreds of millions of homeowners heat their homes in this country and like billions heat their homes worldwide, if you can figure out how to do it in this better way and make it cost effective, the market is just incredibly big and therefore, the impact you can have is incredibly big.
Jason Jacobs: And so is there any science risk here or is it strictly more about engineering deployment scale?
Kathy Hannun: It's much more about engineering and deployment. And one thing people don't realize about heat pumps is that they're actually very common and ubiquitous in our lives, so your refrigerator's a heat pump. It's a very well understood type of system, and your air conditioner's a heat pump. So the actual core product, the science behind it, it's like very low risk. It's really just about how do you get these into hundreds of millions of homes.
Jason Jacobs: Are you competing with the people that were prepared to DIY it with the small mon-and-pop or are you more focused on opening up the market to people that wouldn't have otherwise considered this?
Kathy Hannun: We're much more focused on opening up the market because the demographic that went geothermal in the past, are very, very high-end homes, we tend to not serve that demographic as much because our product and our approach is very much focused on standardization. In order to make our system very cost effective, we built a solution that works for 90% of homes, not 100% , but if you have like very specific needs because maybe you have a very, very large home or you have a very custom vision for what your geothermal is like, that's probably not going to be for us because it just wouldn't be cost effective for us to do one-off solutions for homeowners. I think what our focus is, is just like the very typical homeowner who has had to use fuel oil to-date and is excited that there's an alternative that's less expensive, but also much more convenient to use.
Jason Jacobs: You started in Upstate New York, correct?
Kathy Hannun: That's right.
Jason Jacobs: And it sounded like one piece of that decision was a regulatory decision to pick one place with one regulatory framework for simplicity and prove the model and get the operations hammered out, etc. And then one piece seems like it is, people are using home heating all today because it's more expensive than something like a natural gas? Is that fair?
Kathy Hannun: People are using heating oil today because they don't have access to natural gas. That's right.
Jason Jacobs: Is the thought to start with home heating oil specifically in terms of what you're trying to displace and then broaden from there over time?
Kathy Hannun: Yeah. One of the really big advantages to pursuing such a large market is that you can be very choosy about who your initial customers are. And for us, Upstate New York was the right place to start because as you said, there isn't too much natural gas and people are largely using fuel oil, and you very rarely, I've never heard somebody talk super positively about their fuel oil furnace and their experience using fuel oil. It tends to be a necessary evil in people's lives and they're really excited to have an option to switch onto, because a lot of people use fuel oil just because they don't have a choice. And just to be clear, we call it fuel oil, it's diesel. So people are burning diesel to heat their homes, it's very common in the Northeast.
Kathy Hannun: And as you said, choosing one state to start in makes a lot of sense because you have one regulatory regime, and we have real people going into real homes, removing furnaces and installing heat pumps. And so not spreading yourself too thin geographically is really helpful at the beginning.
Jason Jacobs: With natural gas, people talk about how coal is such a huge emitter and that natural gas... The reason we're on track for Paris or close to it is because we tripped over natural gas and it saved us in terms of emitting much less than coal. But then it can only be a bridge unless we figure out carbon capture and sequestration at scale, but it can only be a bridge because it's still a myth. And when I hear the four parts to one from an efficiency standpoint, do we need to be concerned about that one? Like is there still emission that's occurring with a geothermal solution?
Kathy Hannun: Yeah. It's like electric car in that you're electrifying heating, so you're still using electricity. And so how much emissions is associated with geothermal, even though it's that four to one, that one unit of electricity, it just depends on how clean is it. In a state like New York that has a lot of hydro and is super committed to greening its electricity, that one electricity unit is fairly clean and it's going to get a lot cleaner over time. But I think from my perspective more broadly, when you're cleaning up a giant mess, which is kind of what we're doing today as a species with carbon, it helps to get rid of all the points source emissions and consolidate the problem.
Kathy Hannun: If we can electrify everything and all of a sudden everything's running on electricity, our problems are much simpler because then the thing that we have to do is clean up the electricity grid. We already have the technologies that we need to do that. There's still problems to solve, don't get me wrong, but the growth of solar and wind, the number of companies pursuing storage, it's like those problems are being very actively worked on and we're seeing tremendous rate of improvement over time. So I think that's really the strategy here is, get rid of the hundreds of millions of point source emissions in vehicles, in people's homes, and then in parallel, cleanup the electricity grid.
Jason Jacobs: Your story's intriguing for, well, for a bunch of reasons, but two that I want to highlight. One is that, it's a substantive bite at decarbonization, but you raise money from traditional VCs. So that's one thing I'd love to touch on because I don't see a lot of overlap on the Venn diagram there. I think some of the stuff that VCs do that's green, it still needs to fit into the VC timelines and capital efficiency, etc. And so it may be it's the stuff that's more on the periphery, and then the stuff that's more at the center from an impact standpoint, is maybe not a good fit for venture capital. But it seems like you could be both. That's one thing. But then another is that you started at Google X and spun out from there and so it also be interesting to come back around and talk about if that's a model that should be replicated again and again to get more of these big swings or what the learnings are there, if any.
Kathy Hannun: Starting with the first question, which is essentially because venture capitalists tend to look for a big return on a relatively short time horizon, it's unusual to get a company that you put it in such a nice way, has a mission that's very central to the decarbonization effort. The things that we see, well, you said it better than me, so I'll just let you take the question, but you articulated better than I did myself. Why they're stood out as such a good opportunity because it is so core to what we need to do to reduce carbon emissions, and yet the economics of it are phenomenal. And the reason for that is that fuel oil emits a lot and not just fuel oil, fuel oil, propane, even natural gas, they create a lot of emissions, but also heating fuels tend to be very expensive.
Kathy Hannun: And so because heat pumps are much less expensive to run and are much more renewable, you have this dynamic where not only are you doing something very useful for our society by switching people to a technology that doesn't emit, but you're also saving them a lot of money. It's such a win-win. And one thing that's unique about geothermal is even the utilities. When people install geo because typically, utilities don't sell fuel oil, and a lot of them don't sell natural gas. So when a homeowner switches from a heating fuel to geo, they're paying utility for the electricity to run that system, and the utility has just gained a customer. And not only that, heat pumps, when you're heating your house, you're running it a lot at night, you're running it a lot in the winter, these times when the grid has access capacity.
Kathy Hannun: So the utilities are also on-board, and they've really been supporting Dandelion in the switch to geothermal. So you have a situation where the customer benefits, the utility benefits and of course, you're decarbonizing, and those situations are so rare, unfortunately. So it really stood out to me, it's what has really made me devote so much of my life these past few years to this project, is the size of the opportunity in the fact that all of the interests seem to be aligned towards solving it.
Jason Jacobs: So the utilities are potential distribution channel as well?
Kathy Hannun: Some of them are very interested in that. Right now, we have a partnership with Con Edison, so they give our customers an incentive to go geothermal, so they help reduce the cost for our customers. But utilities are very much thinking about how they want to be involved in this transition and different utilities have different visions for what that will look like, and I think it's still to be seen how it all plays out.
Jason Jacobs: Do you think this is a repeatable playbook, the criteria that aligned here that made this a big opportunity in venture timelines? Because VCs are great when they see things that they can do big and fast, and we want to do decarbonization big and fast, just most of the opportunities don't look that way. And so this one does, are there other others that do as well?
Kathy Hannun: I'm sure there are, and I can't tell you exactly what they are because I don't know myself. That was really my job a few years ago at X, was to really sort through them and try to figure out which ones have that property and which ones don't. I think that more and more will and as policy changes, it helps, as consumer preferences changes, it helps. Like Impossible Foods, one of your previous guests is a good example too, where I think non-meat substitute, can you imagine that being in, I think they're in Burger King now, right?
Jason Jacobs: Yeah.
Kathy Hannun: They have the Impossible Whopper.
Jason Jacobs: I had an Impossible Whopper.
Kathy Hannun: How was it?
Jason Jacobs: I didn't eat bun. I literally just had the "meat," but I couldn't taste the difference. Actually, it tasted better than a normal Burger King burger.
Kathy Hannun: For them to have conquered Burger King, it's like so symbolic, I think because it would have been so hard to imagine Burger King selling a vegan Whopper. Even 10 years ago, I don't think anyone would have thought it was possible, but now I was in a really small town in California in Mount Shasta and the Burger King there was selling the Impossible Whopper, and I just felt like the world had changed, to see it there. And there will be more and more opportunities like that, I think.
Jason Jacobs: Here's a different question for you then. So it was your job at X to go and identify these opportunities, and you found this one. So I'm not articulating it well, but this is a special opportunity. I would love nothing more than to go find an incubator, even if I'm not even involved, just see more of these types of big decarbonization swings happen. What criteria would you counsel someone who's out looking for the next one, any learnings from the fact that you stumbled on this one? If you weren't doing Dandelion and you were out looking for one that had this criteria somewhere else, what are those criteria?
Kathy Hannun: I think that market size is a really big one. Energy actually lends itself to market size because we all use so much of it. That's one of the advantages of being in the space, looking for an opportunity where if you figure it out, the market is massive. And then looking for an opportunity where you can actually make enough of a margin on the product to sustain the business. And so that's not always obvious, that requires a lot of analysis to look at, how will this cost curve change over time based on how technology's evolving or how regulation is evolving? Or, I don't know. I guess, just your best guess as a person evaluating the opportunity for what's possible in terms of costing down.
Jason Jacobs: And how much of that work did you do at X before making the decision to spin it out?
Kathy Hannun: That's a lot of the work we did at X. I would say the work at X fell into a few buckets. There was really assessing the technology space. So basically, the core question was, can technology be used to really help solve this problem and bring down costs? And the benefit of being at X is that you have all these amazing world-class technologists that work there that are there to help you answer these questions. So it wasn't me answering the questions, it was our team of mechanical engineers and software engineers and all of these engineers that work there looking at, what is the state of drilling technology? Let's test a few different approaches to the drilling problem and figure out what types of technologies work best and how we could envision them evolving to continuously improve on solving this problem of putting the ground loop in the yard.
Kathy Hannun: And let's purchase all of the geothermal heat pumps that we can find on the market and really understand what the potential is for creating a less expensive one that is more accessible to a mainstream audience. And simultaneously looking at how much are people spending on heating across the world and how much would they be spending if they use geothermal and what's that difference and where does it point us to as the best place to bring this product to market. So we did a ton of that analysis work and at the very beginning of it, geothermal was just one of many ideas I was pursuing in this way. But then as we progressed through it, very unusually, all of the answers that we were getting back from this research were so positive.
Kathy Hannun: And I think that's actually rare, though I'm not saying that there aren't many opportunities like this, it's just hard to find them because often the more you dig into an idea, the more you understand about its complexity and the obstacles, it becomes clear why something will be really hard. And with this idea it was, the more we looked into it, the more we couldn't believe it wasn't already happening because it just seemed like the world was ready for it.
Jason Jacobs: So if you were starting again, Dandelion goes public, you take a year to reach out, whatever, just Dandelion didn't exist and you were starting again now and the goal was to go and catch another tiger by the tail that had a big impact on decarbonization in venture time scale, would you start at X as the best hatching ground for that or would you get some co-founders? What would you do next time based on what you learned from this experience?
Kathy Hannun: I think it depends on the idea. Here's why I say that, if you have an idea like, "Let's make cars drive themselves," that's going to take a decade, maybe more than a decade of the best engineers, hundreds of them, thousands of them working to figure out how to do something that seems very magical like have a car drive itself. I think you do need a Google X or some institution with a huge amount of capital to invest in that research and development, but then once you get it right, you will have created an industry worth trillions of dollars probably, and the pay off will be huge. X is great at that. I think for other ideas, you don't need a Google X because, and Dandelion fit in this type of idea, which is why we spun it out, but we couldn't launch Dandelion and we needed to launch Dandelion to really see how the market responded, how customers responded, then we can iterate our business and our product from there like any other startup.
Kathy Hannun: We didn't have a decades worth of research that needed to get done. Of course, we do have a large R&D budget at Dandelion and continue to do a lot of research as we go, but it's best to be informed by what's actually happening with our real customers that we install every day. So that project, it lends itself much better to being a startup and facing the pressures of a startup and being forced to be really focused on the business and just creating a sustainable business that gives customers a product they want.
Jason Jacobs: How much of finding the Dandelion do you attribute to good fortune and timing and how much of it do you attribute to the process?
Kathy Hannun: I think that X is a really special place in that we benefited tremendously from having teams of mechanical engineers who could assess the capabilities of different drilling approaches and all of the resources there really helped give us confidence that Dandelion was an amazing opportunity in a way that would have been harder, much harder if we hadn't had the resources that X provided. But I do think that there's a lot to say about timing when it comes to Dandelion because even in the two and some months, years since Dandelion has existed, the landscape for us has changed so much for the better New York where we are based. Geothermal has really come to the attention of the state government because New York has announced very ambitious climate goals and the only way they can achieve them is if they clean up heating and cooling in buildings. And the only way to really do that is with heat pumps.
Kathy Hannun: And so, how fortunate that we're a heat pump company in this state when there aren't that many? It's just our interests are so well aligned with the state of New York's interests in this climate fight. So the timing, we benefit from a lot of their policies and just the awareness more than anything else among customers, that geothermal is a real option and it's one that the State of New York endorses and Con Edison endorses, and it's just, it really helps establish credibility for an industry that's been so small in the past.
Jason Jacobs: I'm going to ask a question one different way, and it's not because you're not answering it, it's because I really feel like there's a diamond in here and I'm trying to get at it. This is a different direction that I typically take this podcast, but I really think like it's been rare for me, I've talked to a lot of people and I come from innovation, but it's been hard for me to get excited about getting into innovation again because I want to have the maximum heck on decarbonization. And unless I'm doing the kind of thing where it's 10 years in the lab before it sees the light of day and an MVP looks like a 500 million or $2 billion plant, then it doesn't feel like I'm putting decarbonization at the sweet spot, but you're doing it, but you're doing it in a model that I know how to do. So I'm like, "Whoa, stop the train. I can't leave this room until I figure out how to do that."
Jason Jacobs: And so, I guess one question is, if you wanted more Dandelion type companies, and what I mean by that is companies taking a big swing at decarbonization in venture timelines to exist, and you could wave your magic wand and change anything to make that happen, what would it be?
Kathy Hannun: Well I do I think this maybe goes to a previous question you had too, but really understanding where are the sources of emissions because until the buckets and where they're coming from, how can you know where to focus to really have that big impact? And so, it's surprisingly hard to find that information. You've been on a Climate Journey now and talked to many people, do you feel that you have a good sense in your mind of where the emissions are coming from and therefore what opportunities are central and what would be more on the periphery?
Jason Jacobs: Each day I think I do until I talked to the next person who directly contradicts the one before. And it starts like, "This study and that study or this long form article or that long form article... " It's just information overload, it's hard to keep up with. I hear stats all day long, I have for seven months, but I'm still hard pressed to rattle off other than the ones that I have from my last discussion, so I'm trying.
Kathy Hannun: I know. So am I. It's just, I think that there's not so much clarity there, but from a consumer standpoint, I think a lot of entrepreneurs who do tech startups, it's really thinking about, what are these big problems in everyday life that we can pursue in a different way to create tremendous value. And so the question is the same, but it just helps to be able to overlay that question with and where all the emissions coming from, and then there's an overlap. But I know I'm being very abstract.
Jason Jacobs: Those functions don't talk, that's the problem.
Kathy Hannun: They don't usually talk. It requires one individual or a group to keep them both in their mind.
Jason Jacobs: So this is an idea? I know you have a lot of free time because you're scaling a hot startup that raise lots of money and growing faster, you're about to have another kid, so I know you have a lot of free time. Here's a free suggestion for you is, think about if you could clone yourself and go and build a hundred other Dandelions that are targeting major areas of decarbonization in venture timeline so fast because we need fast, not just because that's what I know how to do, but forget about me, we need fast because this is a huge problem and we don't have a lot of time and the stakes are high. And so if you were going to replicate this path or set up entity or infrastructure or policy or whatever, for example, could you take the best of what's in X as an independent entity?
Jason Jacobs: Could you do something that enabled the X's to pop up in different regions all around the world? Is there a fellowship program that takes people like you and then gets the right skills round table that you had at X, plus ones that you wish you had and didn't have and makes them available to all the fellows? And the thing, cyclotron-
Kathy Hannun: You know what I would want? Here's what I would want. Thanks for asking the question in so many different ways. As an entrepreneur, from my perspective, what I would love is if Amazon would make public, how much do they pay for the cardboard and the plastic that they ship millions of packages in every year and what would they need in order to replace it with something else? What criteria would they be looking for? And I would love for the utilities to publish, what are their biggest problems that are holding them back from bringing more renewables on the grid with as much information as possible? Or grocery stores to make it easier to find information about how they experience food waste and what they do with it and how much it costs them. Maybe like not in a proprietary way, but as much information as they could divulge.
Kathy Hannun: Because I think there are just so many solutions, people are so creative. There's this group of people that care so much about the climate problem and is so creative and are willing to work so hard, but it can be very difficult to know what are the leverage points and if you can make, this is just a random example, but I know people are trying it. If you can make a cardboard substitute out of fungus, what do you actually need to achieve in terms of cost and durability and specs to have that be a real product? And is there any hope in the short term that that will happen? I think I would try to find the right point of contact and the logistics comp... Like yeah, you can get it, but it's just, that's the hard part is really understanding what's going on within these industries.
Kathy Hannun: And it took a long time for Dandelion to really understand the dynamics of geothermal as it existed and what some of the obstacles were holding it back. And I can speak on a surface level about, yeah, of course we need to make drilling better and of course we need to make these systems cheaper, but there are also like a thousand obstacles below the surface that we're systematically tackling every day and that's the work of the company. We really had to get in very deep to figure out what they were, and it would have been, I think for any entrepreneur, just having it be clear what those problems are would make it much faster to solve them.
Jason Jacobs: From a skillset standpoint, have you found that, is it mostly just about doing the digging and hustle and being systematic and building relationships and trust and that or are there certain skillsets that are essential in trying to get at that data?
Kathy Hannun: I think it's mostly the former, to be honest. I think that a certain amount of just doggedness and fearlessness and just willingness to go after something, it's a quality you see in a lot of entrepreneurs in different forms and I think that that is probably all you need. For me, I would say it's been helpful to have a science and engineering background, but not required. I think that it's helpful because it's easier to look at a new technology and have an intuitive response about how feasible it is or how practical it is, but most of it, I think is just the persistence and the effort that you put in to finding the answers.
Jason Jacobs: Well, you've definitely given me a lot to think about and I suspect this is not the last you've heard from me on this topic because I think whether you note or not, I think that the model that you've unlocked with Dandelion, I'm sure you know it, but just to emphasize from an outsider standpoint, it's really special and we need a lot more of that. And in my experience, it's been rare, so one thing that I'm coming away from this conversation thinking about is, how do we get a lot more of that? And I think you'd be a really helpful sounding board as a start, throwing some things against the wall and being experimental about the right way to do that.
Jason Jacobs: But to your point though about the Google X process, I think from the traditional software world, I came from the consumer side, a lot of it was about rapid experimentation and stuff like that, but to your point in this type of problem, that can't be the only thing. And you don't even necessarily lead with that, which is very different than what a lot of Silicon Valley's used to.
Kathy Hannun: I would love to bounce ideas with you because it's what is the most fun for me, but just to give another example, because the fungus one, I don't know, full boxes. Another thing that stands out to me, sometimes as I'm living my life, I just think about that overlap between what I would find better as a consumer and what would also just be much better for the environment, not always energy, but just sustainability in general. One thing that I'm sure would be better is, Craigslist only goes so far with helping people give away things that they don't want anymore or people who want things find the things that they want, not in a new store, think about how many couches are made in the world each year and how many people actually need new couches in the world each year.
Kathy Hannun: I'm sure if you could just find a way of making it easier to search for what couches that already exist people want to give away, you could facilitate this secondary giving economy that would mean that much fewer couches need to be made every year. And that is obviously not specific to couches at all, I have a young child and she outgrows things every few months, I won't need my hot pink plastic baby tub for ever, but the effort to figure out who to give it to is more than I might want to take on when it's time to give away that thing. I just think there are so many things like that where a really smart person could come up with an elegant solution. And I don't know what the solution is, but I know that the fact that technology and software and excess capacity and search and machine learning for image recognition and all of these things should help us solve this problem better than we've ever been able to in the past.
Kathy Hannun: I just think there's such a tremendous overlap of what technology can do and the problems we need to solve. And it's just about having that mindset of, what would actually be better for me as a consumer? What would make my life easier even if I didn't care about the environment?
Jason Jacobs: I love all of that. I think the one thing I would add is, in just like a mindset shift of caring about solving a real problem and not just making money. I'm just disillusioned with Silicon Valley and all.
Kathy Hannun: More of the knowledge that if you solve a real problem, you'll probably make a lot of money.
Jason Jacobs: That's where I am. It's not going to be from a podcast, but it's I feel like I'm not approaching this from a money standpoint at all, but I'm probably going to end up making more money doing this than I would doing anything else because it's not from money standpoint at all. Like this is a huge problem and it has to get solved and that's what motivates me every single day.
Kathy Hannun: And it gives you a lot of allies because I think one of the huge advantages of solving a problem that matters is, when else would a company the size of Dandelion have the support of the State of New York and Con Edison utility? Dan Yates becoming our executive director and just access to tremendous talent. Luckily, there are a lot of people that all want the same thing, which is to figure out this problem.
Jason Jacobs: That's a great plug though. If you want help from a lot of important people, work on a real fucking problem.
Kathy Hannun: You've said it well, you've said it well.
Jason Jacobs: Two final questions, they're quick ones. We just do this with every guest. One is, if you had a big pot of money, let's say $100 billion, you could put it towards anything besides Dandelion, anything to maximize impact on the climate fight, where would it go? How would you allocate it?
Kathy Hannun: That would be a huge process to figure that out, but I think to our conversation earlier, it would be the process of doling out that $100 billion would just be a process of finding those leverage points. And I don't know what they are at the top of my head, but I think some of them will yield themselves to companies where you'd want to invest. Some of them will be policy fights, some of them will be probably more conservation measures. But yeah, I think the fun would be in just figuring out where that money could go the furthest. I know that's kind of a boring answer, but-
Jason Jacobs: No. There's no wrong answer here. And we just want what's going to have high name back, and it doesn't need to be the sexiest stuff. And last question, which is just, there's a lot of different types of people that are listening to the podcast, some of them might be entrepreneurs like you and I, some of them who care about climate and are trying to figure out how to help. Some of them might be people of significant means who want to be philanthropic but don't know how to think about that, or people that just like they're a teacher, they're a lawyer, they're a social worker or whatever. They're not going to give up their job and their career, but they care a lot about the planet and they want to help. So I guess, for those different audiences, just talk to them for a minute. What advice do you have for people that care about the planet, want to help, aren't quite sure where to start or what to do?
Kathy Hannun: I was in this category myself for a very long time, wanting to have a career that had an impact on the climate. I know not everyone who's listening wants a career necessarily in this space, but for me, I did, and it's hard to figure out what to even do. There are only so many companies and it's just not always clear where one can have the most impact. And I think that the advice that, I'm not sure if I would've listened to it, but it's true, it's just like, it is possible as you are doing with your Climate Journey to just learn about what's going on and then create your own opportunities and pursue the ideas that you think will be meaningful. I just was surprised, I guess, that the world is a place where you can just set out to do something and it might just work. You know what I mean?
Kathy Hannun: I would say that fear of failure and just fear of not knowing exactly what the right answer is, is one that holds a lot of people back where I don't think it needs to be a real barrier. But then for everyone else, I think that there are a lot of choices that seem very small in everyday life that almost can seem meaningless, like trying to live in a way that's aligned with our values about what we think the world should be like. But when I think about the people who have made Dandelion possible, a huge group that we would be nothing without is our initial customers. Those people that took a chance on our product from a company called Dandelion that they had probably never heard of before when geothermal isn't a mainstream technology, but they replaced their fuel oil or natural gas furnaces with it because they really believed in what we were doing.
Kathy Hannun: And their support and the fact that they adopted the technology allowed us to get the next round of investment and recruit additional employees and launch the next version of the product and just continue to grow the idea. So I do think that as consumers and just people that want to make that difference, like going to Burger King and getting the Impossible burger. It's such a small act, but that's the thing that really lets this movement happen.
Jason Jacobs: Well, the crazy thing is that it's such an obvious one, but you're the first person that's brought it up, and it makes a lot of sense if you think about. If you care about climate, be an early adopter.
Kathy Hannun: Yeah. Take a chance. You're helping with the trial and error and iteration that will determine what products we can come up with that will solve the problem.
Jason Jacobs: Anything I didn't ask or any parting words for listeners? You said a lot.
Kathy Hannun: I think you've been very comprehensive with your questions. It's been a great conversation. Thank you.
Jason Jacobs: Kathy, this is great. You're truly an inspiration. I wish you every success with Dandelion and thanks so much for coming on the show.
Kathy Hannun: Thanks so much for having me.
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 myclimatejourney.co. Note, that is .co, not .com. Someday, we'll get .com, but right now, .co. You can also find me on Twitter at @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.
