Startup Series: Pano & Convective Capital
Today, we have two guests, Sonia Kastner, Founder and CEO at Pano, and Bill Clerico, Founder and Managing Partner at Convective Capital.
Both Sonia and Bill are keynotes in the emerging category of fire tech and in the subcategory of climate tech that's referred to as adaptation solutions, technologies that can help deliver resiliency in the face of an increasingly unstable planet. At Pano, Sonia is developing technology that creates actionable intelligence for wildfire management. They're deploying a network of high-definition cameras across our forests to help generate faster and more informed fire response.
At Convective Capital, Bill is investing in technology startups that are solving the problem of extreme wildfires, including Pano. Cody, Sonia, and Bill dive into the issue of wildfires, how and why they've grown in severity, the traditional response mechanisms that fire agencies have used and how that's changing, what types of technologies are being developed to support their efforts, and of course, some details about Pano's product offering. We also touch on the talent that's flowing into fire tech and how critical it is for us to continue to fund and develop new ways to adapt to a changing planet, try as we might in parallel to reign in the emissions and trapped heat that are causing climate change.
Get connected:
Cody Twitter / LinkedIn
Sonia Kastner / Pano
Bill Clerico / Convective Capital
MCJ Podcast / Collective
*You can also 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.
Episode recorded on January 12, 2023.
In this episode, we cover:
[3:00] Sonia's background and catalyst for working in climate adaptation at Pano
[5:05] Bill's background in FinTech and inspiration to start Convective Capital
[7:33] The mega wildfire crisis today and trends over the last two decades
[11:54] Universal factors contributing to wildfires across different geographies
[14:28] Solutions to wildfires including Pano's technology
[16:49] An overview of firefighting today, early detection, and rapid initial attack
[21:09] How suppression efforts could change based on fire characteristics and the need for collaboration
[24:58] Challenges of building a tech company in the wilderness
[27:37] How Pano is leveraging Starlink to create solutions for their customers
[29:14] An overview of the company's physical product and buyers
[31:52] How Convective Capital approaches companies like Pano who sell primarily to fire agencies
[34:27] How organizations like CAL FIRE are changing their approach to work with tech companies
[36:19] Skills needed and where talent is coming from
[38:40] What's next for Pano and Convective Capital
-
Jason Jacobs (00:01):
Hello, everyone. This is Jason Jacobs.
Cody Simms (00:04):
And I'm Cody Simms.
Jason Jacobs (00:05):
And welcome to My Climate Journey. This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:15):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (00:26):
We appreciate you tuning in, sharing this episode, and if you feel like it, leaving us a review to help more people find out about us so they can figure out where they fit in addressing the problem of climate change.
Cody Simms (00:40):
Today, we have two guests, Sonia Kastner, founder and CEO at Pano, and Bill Clerico, founder and managing partner at Convective Capital. Both Sonia and Bill are keynotes in the emerging category of fire tech and in the subcategory of climate tech that's referred to as adaptation solutions, technologies that can help deliver resiliency in the face of an increasingly unstable planet. At Pano, Sonia is developing technology that creates actionable intelligence for wildfire management. They're deploying a network of high-definition cameras across our forests to help generate faster and more informed fire response.
(01:19):
At Convective Capital, Bill is investing in technology startups that are solving the problem of extreme wildfire, including Pano. The three of us dive into the problem of wildfires, how and why they've grown in severity, and of note, climate change is a contributor to this, but not the only reason, the traditional response mechanisms that fire agencies have used and how that's changing, what types of technologies are being developed to support their efforts, and of course, some details about Pano's product offering.
(01:48):
We also touch on the talent that's flowing into fire tech and how critical it is for us to continue to fund and develop new ways to adapt to a changing planet, try as we might in parallel to reign in the emissions and trapped heat that are causing climate change. Sonia, Bill, welcome to the show.
Sonia Kastner (02:04):
Thank you.
Bill Clerico (02:05):
Great to be here.
Cody Simms (02:06):
Well, we are in California. It is January. It is pouring rain. It's you would think not the best time to be talking about wildfires, but in reality, it's all related because of mudslides and ecological disasters, unfortunately, that we're all living in. I am really excited to have you both on today because you are living and breathing the solutions to our Western wildfire problems here in the US. Before we dive in, and we're going to cover all sorts of topics related to this, why don't you each give us your backgrounds and the trigger moment that got you to...
(02:45):
Because I think neither of you have a deep, long background in wildfire work. Something has triggered you to spend the next decade plus or more of your life working in this area. What caused it? Sonia, why don't you jump in and introduce yourself?
Sonia Kastner (03:00):
Sure. Thanks, Cody. First, thank you so much for having me on today. I actually listened to My Climate Journey over three years ago as I was exploring my reentry into the climate space. Cody, if you recall, you and I connected and you were a great sounding board to me and my entrepreneurial journey. It's really great to come back and reconnect years later when Pano was much further along. My climate journey started, I guess, with my physics degree in undergrad, as well as in my youth. I worked in political campaigns, and I worked in the Bloomberg administration in New York on the policy side.
(03:33):
I really love the impact that you can have in the public sector, but I love the speed and the pace of innovation you can have in the private sector. In 2007, I moved out to California to get involved in green energy. I went to business school at Stanford. I joined a solar photovoltaics company and hoped to spend my entire career working on green energy and preventing climate change. Well, fast-forward 15 years, it doesn't look like we've prevented climate change, sadly. We now need a dual track. We need to reverse climate change, which is going to take decades. It's going to take many, many great minds.
(04:10):
I've been so encouraged as I was listening to My Climate Journey back in 2018-2019 seeing the investment and the innovation pouring into carbon removal and batteries and electric vehicles. But I felt an area that was majorly underinvested was adaptation to the climate change that's already here today. One of the ways we're feeling the effects of climate change first is natural disasters. They're now being called climate disasters, wildfires here in the West Coast, mudslides, tornadoes, hurricanes, cold spells, blizzards. Every area of the globe is touched by multiple climate disasters.
(04:47):
I felt that there were a lot of low-hanging fruit opportunities for modern day technology and innovation to lessen the harms of these disasters. And that's what we've set out to do at Pano.
Cody Simms (04:57):
Fantastic. Well, it's so great to hear what you're working on now and to see the update. Bill, how about you? Give us your background and how Convective came about?
Bill Clerico (05:06):
I'm a lot newer to climate than Sonia is. I was a FinTech entrepreneur. I started a company called WePay back in 2008. I have a bad habit of starting new projects right before an economic downturn, but it worked out okay last time. We stuck it out and made it through. We built WePay over about 12 years. The company was acquired by JP Morgan. I ran a payments business at JP Morgan for a couple years. And then when I left JP Morgan, I wanted to try something new. I had spent a decade plus in payments.
(05:34):
I had been watching with a lot of interest and concern to see everything happening in climate. And then had a number of personal experiences with wildfire. As a resident of California in the Bay Area, we had our infamous Orange Day in September of 2020.
Cody Simms (05:48):
Bill, this is the second episode in a row that I've recorded that Orange Day has come up, for what it's worth.
Bill Clerico (05:52):
I think that was a really just earth-shattering moment for a lot of people. It brought the issue home. The sun literally didn't rise in San Francisco that day and the streetlights were on at noon. That happened. My wife and I own a cabin up in Mendocino County, and so we spend a lot of time outside. We've had wildfire come to literally the doorstep of our property twice, once on our access road and once at a neighboring property. Just seeing this over and over and over again and obviously seeing the crisis in paradise and in Santa Rosa and elsewhere, it just became really clear to me that wildfire was at a breaking point.
(06:24):
I just with personal interests started to study the problem and talk to everyone I could about it. I realized that it was at such a breaking point and such a crisis and there were so many big economic impacts of it, whether it be utilities going bankrupt or insurance companies losing billions or governments having to rethink the way they do wildfire, that there was enough disruption where there was real commercial opportunity for startups and for technology. I started making a couple angel investments and trying to help folks out who were trying to innovate in that area.
(06:54):
I convinced myself that the opportunity was large enough and that the need was dire enough, launched Convective Capital to go back those startups professionally. We're a $35 million venture capital fund. We make early stage investments. We are thrilled to be investors in Pano and to be working with Sonia to help with this crisis.
Cody Simms (07:13):
I have to ask, how did the two of you meet? How did Convective and Pano get a business together?
Bill Clerico (07:18):
I would say the circle of people working on technology and wildfire is still quite small. I think minds find each other out. I think we've met I think in person for the first time at one of Convective's dinners, and we were just so impressed with what Sonia had built.
Cody Simms (07:33):
Well, fantastic. I would love to start really by diving into the phenomena of wildfires. It feels like over the last decade, maybe decade and a half, and I don't have the data, you probably do, Bill, the wildfire phenomena has increased dramatically in terms of frequency and severity of fires. In fact, to the point where I now think wildfire isn't just an adaptation issue, it's actually one of the major sources of emissions that's happening in the world on an annual basis. Maybe help us understand, we can maybe focus on just the US West to begin with, what has caused this increase in wildfire activity and severity? How much of it is climate change?
(08:23):
We had an op-ed writer for our newsletter recently focused on water issues coined a term I thought was interesting called greenhouse gaslighting, which is blaming climate change on everything, when from a water perspective, there's a lot of reasons why there are water problems that aren't climate change. I assume from a forestry perspective, there are decent number of reasons why there are wildfires that aren't related to climate change, but of course, there are many that are related to climate change. Maybe just talk us through the state of what's happened in the last decade or two that's caused the reality of where we are now.
Bill Clerico (08:54):
Yeah, lot to unpack there. I think I would start by just lending some numbers to what you said, which is we truly are at an inflection point in this wildfire crisis. In California, 18 of the largest 20 wildfires in all history have happened in the last 25 years. It's basically like the last two decades we've reached this breaking point where things are just a lot different than they were before. With that change, I think a lot of people offer different theories. I think there's a couple really core drivers of extreme wildfire. I think the first is, of course, climate change plays a role. Our summers are longer. They're hotter.
(09:33):
We have less water. There's certainly a push from climate that really exacerbates this issue. I do think that we somewhat do the problem a disservice though when people exclusively blame it on climate. I think climate is certainly a big part of it, but it's deeply intertwined with some of the other drivers. I think unlike other types of climate disasters, it's not like we need to solve climate change in order to solve wildfire. Actually there are tactical short-term things we can do that will make really big impacts on the problem. We don't need to reduce climate change by multiple degrees in order to reverse wildfire, but climate is certainly a major driver.
(10:13):
Second is really the forestry practices of the last 100 years. For thousands of years, California burned. That was just part of life, but it burned very frequently and therefore at low severity. You would have fire actually burning landscapes every few years, and that would reduce the fuel loads by a lot. You'd have small fires burning all the time. You wouldn't get the major infernos that would incinerate landscapes, but you have low severity fire and it would happen quite regularly. And then when we started to settle the West Coast of the United States with Western settlers that tried to build the timber industry and agriculture, all of a sudden that fire no longer became a natural part of the way Indigenous people lived.
(10:53):
We excluded it from the landscape to protect industry. And that seemed like a good thing for 50 years and maybe arguably it was in the short-term, but the downstream impact of that is that our forests are now about three times denser than they were a hundred years ago. You've got triple the amount of fuel and vegetation consuming less water because of climate change, and that is a true tinderbox. Then we layer on top of it two other things. We went and built a bunch of homes and put a bunch of assets out in these really high risk areas. We have people living out there that can cause ignitions and can be affected by the fires themselves.
(11:29):
And then we went and built 200,000 miles of power lines through it all in California. It's that combination of those four factors of climate forestry practices, the expansion of the wildland urban interface, and then an aging power line infrastructure, that's what led to this megafire crisis over the last years. We can argue about the relative contribution of those various factors, but I think it's really those four things that have led to where we're at.
Cody Simms (11:54):
Wildfires are not just a US phenomenon though. They're happening in Australia. They're happening in Europe. How similar are those four factors in other parts of the world to what we've built for ourselves in California?
Bill Clerico (12:08):
Yeah, I would argue it those factors are universal. Different histories and different timing of some of the stuff, but in different forestry practices and stuff like that. It's slightly different in various places, but largely similar. We have a climate crisis compounded by industrial thinking around forestry that's led to high dense forests. It's like if you take a spring and you just keep putting more and more energy into it, which is putting all this vegetation there, eventually that spring pushes back. And that's where we're at today with these high severity megafires.
Sonia Kastner (12:40):
Bill makes fantastic points and really does a great job of summing up the state of the industry. I will say if you look anecdotally at some of the phenomena the past couple years across the globe, it is pretty shocking. If you look at what happened in Europe this summer, backyard gardens in the City of London were spontaneously bursting into flames because of a heat wave. That is not a broad data driven trend that explains the vast majority of wildfires, but that's an example of fire behavior that is new due to extreme heat that we were not seeing frequently 5, 10, 20 years ago.
(13:19):
Across the globe, you are seeing fire behavior driven by multiple factors, but including climate change, that is just completely new and terrifying.
Cody Simms (13:28):
Help me understand when it comes to trying to deal with this, I feel like I see three big buckets of solutions. You each may have your own mental model for how you map this out. Bill, as an investor in this space, I'm sure you have a mental model for how you're mapping this out, but I see there being a bucket of companies, including Pano, focused on detection. Where are fires? Can we understand quickly before they turn into megafires? Can we figure out what's going on so we can deal with them? We're obviously going to spend a lot of time on that category, because Sonia, you live and breathe that space right now.
(14:04):
I see response and suppression, which is like, okay, there's a fire. How do we get it out as fast as possible? What's the tactical response we need to take? And then I see the whole notion of prevention, maintenance, mitigation, which is just like how do we improve our ongoing forestry practices? Are those the right three buckets of stuff for how to think about solutions to wildfires?
Sonia Kastner (14:28):
Generally, yes. The space that Pano plays in is the disaster management industry, which is existing industry, $150 billion global industry of both private sector and public sector emergency managers. It includes four typical phases: mitigation, preparedness, response, and recovery. And then those are usually depicted as a circle which feed back into each other. The learnings from the response and recovery feedback into mitigation, which is hardening your system and making your preparedness plans in the future.
(15:01):
Pano, I can explain a little of what Pano is. Our current solution is being used in both the mitigation, as well as the response phase. Pano overall is building a modern day platform for climate disaster data management in all of these phases, but starting with real-time data. Our team has a background in remote sensing and internet of things, and our expertise is in deploying sensors and gathering data in real-time and turning that into actionable intelligence.
(15:31):
Our first solution is a sensing solution where we deploy cameras on mountaintops combined with geostationary satellite data to detect fires and then confirm and pinpoint those fires, disseminate information about those fires, and then provide ongoing situational awareness around those fires to all the relevant agencies and emergency management professionals so that they can have a common operating picture and respond. It is definitely used heavily in the response phase to suppress fires more quickly and nip them in the bud so they don't become megafires.
(16:06):
But our customers are also using our solution to more safely do prescribed burning, to Bill's point, putting fire back on the landscape during the rainy seasons so that you can remove those dry fuels that create that tinderbox to reduce the fire risk during fire season. Prescribed burning is a terrific tool, but it needs to be done safely. Even in January, in the rainy season, prescribed burns can get out of control. Our customers use Pano to detect spotting that may spread to places that it's not intended using our AI algorithm, as well as to monitor the fire from up to four camera angles at once and ensure that fire is only burning the area it's intended to burn.
Cody Simms (16:49):
Fantastic. That's a really helpful broadening picture of Pano, including my understanding of it. Thank you. That makes a ton of sense. Based on data that a service like Pano can provide or other related services that may be helping response organizations understand where something's happening that needs to be taken care of now, what is typical response look like today? I mean, my understanding is we're talking like Black Hawk Down style military helicopters that are being flown in to basically drop fire retardants on fires. And then on the ground, essentially tanks that are building big clearing areas. When there's a fire, is that what it looks like today?
Sonia Kastner (17:33):
I'll give a response, and then I'll let Bill add additional color here, because I know he works very closely with the firefighting community on a personal level as a volunteer. The firefighting is changing today, and Pano designed our first solution to facilitate the newer approach to firefighting, which does look a lot like a military operation. You're spot on. Actually when we were researching Pano, we did a gap analysis of what does military surveillance look like versus surveillance available to firefighters and we need to close that gap. And that's what Pano is working to do. The traditional response to detection and suppression was to wait for a 911 call from a bystander, a civilian.
(18:14):
Most of those 911 calls were false alarms. There would then be a mandatory confirmation step, usually by a city fire agency, that would send out a single truck to go drive around, try to find the fire and confirm it, pinpoint it. And then usually the city would be responsible for containing it. And only on rare occasions, maybe the next day, would they call in the state to help. The state is the one who has the heavy resources like helicopters, like bulldozers and water tenders. There's now emerging a new strategy called rapid initial attack, which is to escalate and create a more collaborative and heavier response much earlier in the first hour.
(18:55):
In locations that are using rapid initial attack, you'll see six aircraft, bulldozers, engines from multiple cities being brought onto the fire in the first hour when the fire is five, 10 acres. And within an hour or two of those heavy resources, that fire can be nipped in the bud and then those heavy resources can be released and local crews can mop up. This strategy is gaining in popularity across the globe. Our customers in Australia and Colorado and Montana are all pursuing this strategy, and it's proving to be very successful. Pano designed our first product specifically to enable rapid initial attack. I would love any other color Bill has as someone who's very involved in this as well.
Bill Clerico (19:34):
Yeah, I think I would just add an exclamation point to that. If you think about how a fire grows, it grows exponentially. If you think back to high school calculus and the area under the curve, in that first phase when it's relatively flat, if you can get there quickly, you're going to catch a fire with a relatively low acreage that you can suppress with a reasonable amount of resources. Once it starts to hit those inflection points and starts to get really big, the acreage involved just gets so immense that it can almost be impossible to put out. The physics of suppressing something that big just become impossible with the equipment that we have.
(20:08):
You end up waiting for terrain shifts, weather changes. You end up playing defense. The cost of that is enormous. You think about a fire like the Dixie Fire, which happened in 2021. It cost I think $637 million to put that fire out. You can think about that expense on one large incident versus the expense of a camera or something that could enable catching that a lot sooner. There's a lot of leverage to invest in detecting stuff early.
Cody Simms (20:35):
How does response differ whether you're on private land, national forest service land, et cetera? Sonia, you mentioned the traditional method is a homeowner calls 911, but many of these fires are starting with a down utility line somewhere in the middle of a forest, if I understand it. Or maybe that's incorrect. Maybe most of them are starting along highways because people are throwing cigarettes out of the window. I don't know. You all probably do. But maybe how do you see response changing based on where the fire starts? I don't know if that's a relevant question to ask, but I'm asking it anyway.
Sonia Kastner (21:09):
Sure. There is a complicated system of jurisdiction that determines who is responsible in the early moments of the fire for the initial suppression efforts. However, that approach is being recognized as being outdated in today's conditions, because fires are spreading so much faster. What we have seen is informally across the country, state agencies and federal agencies are eager to collaborate earlier with their city and county counterparts to work on this rapid initial attack strategy. Regardless of whether the fire starts in state land, federal land, county land, city land, there's an all hands-on deck approach.
(21:50):
Pano's technology uses automated modern day SaaS alerting tools to notify an infinite number of users at the same time of that fire. What we do is we onboard all the fire agencies, city, county, state, federal, onto alerts and train them before fire season. And then when a fire is detected by our system, we alert all the agencies at the same time. We also allow them to share the incident with each other over text and email, including live video feed of the image easily, so that they can coordinate and create that coordinated response.
(22:23):
Because the state and federal agencies recognize that regardless of jurisdiction, if they don't participate early, they will likely be pulled in later. It could be, as Bill pointed out, even more expensive if they are pulled in the next day rather than in the first hour.
Cody Simms (22:39):
The way you describe it, it almost reminds me of back now 20 plus years ago when the 911 Commission Report first came out and talked about how the response to terrorism was, which was every agency pointing their finger at the other agency and only operating in their own little siloed playbook. It sounds like wildfire has gone through that similar pain of realizing we all need to work together on this if we're going to solve this problem, and we need to be able to do so rapidly without getting tripped up over jurisdiction and whatnot.
(23:10):
I'm sure it's not as Pollyanna as that, right? There's probably still fighting over jurisdiction and things like that, but it sounds like there's a recognition of the need to work together, because we're all in this together. We have to solve this problem, right?
Bill Clerico (23:24):
Absolutely. Just to give the agencies a lot of credit, with the longer fire season brought on by climate change, they're literally burning the candle at both ends. Their seasons are starting earlier, ending later. They've got to do equipment maintenance. There's a lot of training, recruiting, and at the same time rethinking their strategy while they're also out there 24/7. It's a daunting problem. I think they're working hard on it.
Cody Simms (23:50):
We're going to take a short break right now so our partner Yin can share more about the MCJ membership option.
Yin Lu (23:57):
Hey, folks, Yin here, our partner at MCJ Collective. I want to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and has since then grown to 2,000 members globally. Each week we're inspired by people who join with differing backgrounds and perspectives. While those perspectives are different, we all share in common is a deep curiosity to learn and bias to action around ways to accelerate solutions to climate change.
(24:26):
Some awesome initiatives have come out of the community, a number of founding teams have met, nonprofits have been established, a bunch of hiring has been done, many early stage investments have been made, as well as ongoing events and programming like monthly Women in Climate meetups, idea jam sessions for early stage founders, climate book club, art workshops, and more. Whether you've been in climate for a while, or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mccjcollective.com and then click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (24:58):
All right, right back to the show. When it comes to putting product out in the wildland of forests, I'm sure you're dealing with some pretty heavy resource constraints, right? There's not like LTE cell networks, 5G cell networks around, right? You're dealing with lack of data connectivity in many cases. You're dealing with lack of access to power in many cases. How do you build a technology company that is essentially in the wilderness? What does that look like, and what resources do you need to tap into do that?
Sonia Kastner (25:31):
I will say it's hard. It has been hard. I will say I feel now that we have overcome a lot of challenges and we feel extremely confident in our ability to scale and cover high fire risk areas across a wide range of geographies. When I was researching opportunities to make an impact on climate disasters, I was looking for operationally challenging businesses, because my background had been in manufacturing and supply chain logistics. This seemed like a perfect challenge here. I had worked in the past at Nest, where in 2014 we were rolling out AI cameras.
(26:08):
AI cameras now is becoming a more mature solution, but as you point out, putting AI cameras out in the wilderness without wifi, without necessarily easy power to plug into with just a power plug is not as mature. Pano had to become a full-stack company. We have software AI. We have our own hardware design. I'm in our factory right now. We actually assemble our own systems, which we designed ourselves using off the shelf mature ruggedized cameras. But the system itself, we design, we load our own software. And then we have our own logistics and operations team, which we map and design the network.
(26:44):
We identify the appropriate mounting locations. We often can use existing sites like cell towers or communications towers or water tanks, but we also, if needed, we'll put up a freestanding tower. And then we handle the leasing. We handle the communications. We handle the power, including solar if needed. Each system is configured a little differently for the specific needs. We have dialed this all in, and now it's flowing. We've installed dozens of these all across the world, including Australia, and it's no longer challenging. But to get to that point where it was dialed in was not straightforward.
(27:18):
Now, modern day technology is helping us. 5G has a longer range than LTE. From the same cell tower base station, we can go further into the forest on 5G. Starlink is a config that we rolled out this year, and that's been a great connectivity option.
Cody Simms (27:34):
Maybe describe Starlink for folks who aren't familiar with it.
Sonia Kastner (27:37):
Absolutely. Communication satellites have been around for over a decade, and everyone's probably heard of a satellite phone for a hiker in the wilderness for emergencies, but it was difficult to upload high data video feeds over a traditional satellite phone. Starlink is a project out of SpaceX. They're one of a handful of companies pursuing a high throughput satellite communications network, which is delivered through a constellation of satellites that are over us all the time blinking. That was not developed for emergency management applications.
(28:13):
That was designed for people to be able to get internet at their home in a more remote location where they don't have broadband. But Pano is harnessing this new technology to deliver vertical applications for disaster management. That's the theme of everything we do at Pano. We are out leveraging cutting edge technology, whether it's artificial intelligence or SaaS tools or our geostationary satellite data or Starlink, and we're packaging it into easy-to-use solutions for our customers.
Cody Simms (28:42):
Maybe describe the product. As I understand it, it almost looks like a camera that is on the ceiling at a grocery store, right? It's like a camera mounted in a case that is scanning the horizon, I assume, looking for infrared heat, as well as looking for smoke. You tell me. And then sending those videos up somewhere for someone to look at and say, "Oh, this looks like something we need to deal with, or, oh, this is just someone running a campfire." Is that generally what the product looks like from a physical product perspective?
Sonia Kastner (29:14):
Yeah, pretty much. We have a hardware system called a Pano Station, which includes two high definition security cameras. These are at the top of the line, six megapixel security cameras that can see for 10, 20 miles on a clear day. And then they also have zoom capabilities that can see even further. We mount two of them on typically a tower on a top of a hilltop, and often there is a cell tower or a comms tower on a local maximum in a given region. We're rotating the cameras 360 degrees every minute and uploading that 360 degree view to the cloud. You can see one of the 360 is behind me on the screen.
(29:53):
We stitch those 360s into a panorama, and that's our namesake, Pano. What this means is that this ensures that we always catch the early moments of the fire. Our images are both being stitched in a panorama, but they're also going through a computer vision deep learning algorithm that is looking for wisps of smoke. When we detect smoke first, a human analyst in our Pano intelligence center checks the detection to filter out any false positives, because fire chiefs are busy and we don't want to distract them with false positives.
(30:24):
And then the true positives are marked, which triggers an automated alert, and that goes out to all of the first responders at once who then get pushed a live video of the fire growing, as well as the location, because we deploy a network where we can see the territory with two stations at the same time. And that allows us to triangulate a very precise latitude and longitude, which is also super helpful. That latitude and longitude is in the format that helicopter pilots use for their navigation.
Cody Simms (30:52):
The buyers of your products are a combination of private landowners, utility companies, I'm assuming, who have a lot of liability with these power lines out there. Are fire agencies buying directly as well, or they just tapped in as a first responder? Is there any other big category of buyer that I may have missed?
Sonia Kastner (31:12):
We currently have three industries that we are selling into. Our solution is generally a subscription solution. It is fire intelligence as a service. Often for one deployment, we have multiple subscribers. Those subscribers are fire agencies, city, county, state, and federal. It is power utilities, as you mentioned, who they need to take actions rapidly as well, like de-energizing power lines or draining natural gas lines, as well as informing their users of outages. And then we also sell to private landowners, such as ski resorts and timber companies, who have large amounts of assets at risk and want to coordinate closely with the fire agencies.
Cody Simms (31:52):
Bill, I'm curious, in startup land historically, selling to government is a slow process, and yet I believe in California, there's now quite a bit of money flowing into various fire agencies to help with this problem. As you look at investments in the space, how do you think about companies that are selling to... Obviously it sounds like Pano's doing both, selling to both fire agencies, as well as selling to private enterprise. But how do you think about companies that have selling into fire agencies as a primary customer base, and what does that look like for you as an investor?
Bill Clerico (32:32):
Yeah, that's a great question. I think anytime you're trying to sell a product, your number one competitor is indifference. When people can ignore something, it's very hard to sell them a product. I think particularly in government and in large institutions, indifference can be rampant at times. But I think the bad/good news is that this has become such a crisis that it has awoken the sleeping giants and voters and taxpayers are no longer satisfied with the status quo. Utility rate payers are no longer satisfied. Homeowners paying insurance are no longer satisfied. The demand to do something about it is immense, and that's manifested itself in a lot of different ways.
(33:12):
In California, we just passed a law here that created an Office of Wildfire Technology Research inside CAL FIRE. In the bipartisan infrastructure framework and in the Inflation Reduction Act, we have billions of dollars allocated for wildfire resilience, and that's trickling its way down the system. I think these markets historically have been difficult to sell into, but the window is now open where there's a real need to embrace this. To Sonia's point, it's not just about government. PG&E lost $80 billion of market capitalization because of a fire. Went bankrupt, was charged with a felony, new CEO.
(33:51):
This is not a next quarter might be a little soft issue. This is like a I'm the CEO of a major utility and I'm going to lose my job and our shareholders are going to lose everything. It's truly an immense crisis, and I think these large organizations are acting as such.
Cody Simms (34:09):
Are you seeing organizations structure themselves differently? Maybe it would help me for sure or probably help listeners to even describe who is CAL FIRE, what is CAL FIRE, and how are you seeing them change their approach to engaging with technology companies in particular?
Bill Clerico (34:27):
Yeah, that's a great question. CAL FIRE is our agency here in California responsible for wildland fire suppression. They're actually part of the California Natural Resources Agency. They work really closely with the agencies that manage our natural resources here in California. Historically, they were very focused on suppression. That was their mandate. I think what we've seen over the last several years is really an expansion of that mandate to think about prevention and to think about prescribed fire, to think about forestry practices. I think it was always something that they did, but I don't think ever received the priority relative to going to put out fires.
(35:02):
What we're seeing now is that's actually a really big focus, and they realized that there's these type of investments that's required. We also see our real willingness from them to engage with the technology community. We've got top brass from CAL FIRE seeking us out to talk to startups to think about new technologies and ways of working. It's been, I think, a really awesome partnership. I think there's no silver bullet that's going to solve the whole problem, but that willingness to think about an expansion of the mandate outside of historical suppression is a really positive thing. I think we're seeing that globally too.
Cody Simms (35:35):
For either of you to answer, is there increased public-private cooperation on the problem? We've talked about utilities, but are you seeing Google or other big companies leaning in to also work together with government agencies on these problems?
Bill Clerico (35:54):
Google actually just announced a pilot where they're building tools for perimeter mapping and vegetation analytics out of their Google.org arm. Absolutely. I think companies, particularly those headquartered here on the West Coast, view this as an enormous problem. I think we are in a world of hurt today, but I'm really optimistic. It awakened a lot of really talented people to go attack this problem.
Cody Simms (36:19):
Yeah, maybe weigh in on that too. From where I sit in climate broadly, there's a tidal wave of talent coming in to work in climate, with a capital C. When it comes to wildfire in particular, A, what kind of skillsets do either of you see really needed in the space that are specific to these problems that you're tackling? Where do you see a lot of this talent coming from right now?
Sonia Kastner (36:48):
Well, maybe I'll start there and I'll let Bill add onto it. I think Pano is focused on the data side of the problem. There are a lot of really interesting companies starting to work on other solutions, like the suppression technologies, for example. On the data side of the problem, the good news that there is a lot of need for traditional tech talent. Pano is a full stack IoT company. We are looking for a lot of talent from folks in software engineering, all areas of software, backend, front end, embedded, product management, artificial intelligence, computer vision, B2B sales, and marketing communications.
(37:30):
One of the things we hear from candidates is, "Wow! This is my first time looking at a climate company, and the problems that you have to solve look very familiar to me coming out of traditional tech." Would love to hear from folks who are thinking about making that industry transition. I'll let Bill speak to some of the other types of companies.
Bill Clerico (37:49):
I think it's just a unique moment. There's this old saying among firefighters that the fire service is 200 years of tradition unimpeded by progress. It really is I think a culture of tradition. I mean, it's a dangerous job. It's not a very high paying job. It's a service that really provides an enormous service to the community and really takes a lot of pride in that tradition. But I think that saying was true for probably about 200 years, but really what I've seen in the last five to 10 years is this real willingness to embrace that.
(38:18):
I think it's bringing in it's firefighters learning technology and being willing to go work at tech companies to help them adapt. It's people that have worked in the technology world learning about fire. There's just a very rich exchange of ideas right now, which gets me really excited as both an investor and someone that loves the American West. I think it's an exciting moment.
Cody Simms (38:40):
Well, I have to ask, what's next for each of you? Maybe Sonia, what's next at Pano? What are the big priorities right now? What are you excited to bring into the world over the next year or so with the company, and what should we expect to see?
Sonia Kastner (38:53):
Thanks, Cody. Yeah, there's a long wishlist. Startups have to stay focused. Where we are right now is trying to scale to keep up with the surging demand that we're seeing for even our first solution. Our first solution seem to have really resonated as a tool that's enabling this new rapid initial attack strategy. It's very similar to a more traditional staffed lookout tower, which is not practical to put in the wildland urban interface. We're seeing just a ton of demand from continents across the globe.
(39:24):
We're in scale up mode, which means both scaling across sales and operations, but also scaling our technology stack so that it can support growth, so that it can support new wildfire intelligence features that our customers are asking for. Longer term, Pano sees opportunities to bring similar types of intelligence to help customers react to other types of disasters. Situational awareness is emerging as a category, especially within the utility sector. The utility sector, I would say, has been a leader in climate adaptation and resilience.
(39:57):
When I was researching the space in 2018, that was a place to look, and they identified data and situational awareness as a category that needs more investment. We've been hearing a lot of interest, and I'll leave it at that.
Cody Simms (40:09):
What I hear from you, by the way, that to me is very heartening is there's always a difference between what is a startup, what are they selling, and what is the customer actually buying. Part of me had a skeptical part of my brain that says, "Are they really buying tactical response and actionable info, or are they just buying peace of mind here?" Everything I'm hearing from you is like they're buying stuff that they're using now. They are taking action with the data and the information you're giving them. This isn't like installing a burglar alarm in your home and it's probably never going to get used other than when you set it off yourself. They're actually using the data that they're getting from your system.
Sonia Kastner (40:49):
This fire season is one of the most rewarding experiences in my entire life. Almost every week or day, we were getting a phone call from a fire chief who said, "Yesterday, you pushed me an alert of an incident. It allowed me to bring on a helicopter or a heavier response. We were able to contain the fire at 10 acres. We were able to contain the fire at the home before it moved to the wilderness behind the home." We just had success story after success story. It's been an incredibly rewarding and tangible impact that we have seen from the solution.
Cody Simms (41:19):
That's so great to hear. How about you, Bill? What's next in your world? What are you on the lookout for right now?
Bill Clerico (41:25):
We announced our fund in October, and we're thrilled to invest in Sonia and Pano, but we are actively on the hunt for other entrepreneurs and founders that want to help solve other parts of the wildfire problem. Detection is such an important and highly leveraged piece that's so tightly connected with response, but there's just huge problems to solve in terms of, how do you make landscapes more resilient?
(41:47):
How do you make towns and communities more resilient? How do you build economic models around removing all that waste wood and making productive uses of it? How do you make that safer and better and more efficient? We're very hard at work trying to find the best founders, building the best companies in those areas. Love to talk to folks that are interested in that. And if we could clone Sonia, we would.
Sonia Kastner (42:07):
If I can just say, we've been really fortunate to be an investee of Convective Capital and have the opportunity to learn from folks like Bill and Ilia who bring a ton of technology expertise. But also, we're really excited to partner with Convective to raise awareness of both the need, as well as the opportunity for private sector investment in climate adaptation. This was an industry that didn't even have a name two years ago or three years ago, and it's lagging a few years behind the investment that's going into the climate change slowdown side of the industry.
(42:45):
But there are so many ways that these disasters and climate change effects can be lessened through private sector investment and innovation. We're on a mission together to raise awareness that solutions are out there and to try to accelerate the catching up of climate change adaptation to the rest of the climate industry.
Cody Simms (43:03):
Sonia, Bill, thank you so much for joining today. I really appreciate having you on, and thanks for the work you're both doing to make our world safer and hopefully a world that doesn't result in more Orange Day catalysts for others to jump in. They just do it because it's clearly a business that makes sense and they're seeing results. I really appreciate all that you do.
Bill Clerico (43:27):
Thanks, Cody.
Sonia Kastner (43:28):
Thank you so much.
Jason Jacobs (43:30):
Thanks again for joining us on My Climate Journey Podcast.
Cody Simms (43:33):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity. To do this, we focus on three main pillars: content like this podcast and our weekly newsletter, capital to fund companies that are working to address climate change, and our member community to bring people together as Yin described earlier.
Jason Jacobs (43:56):
If you'd like to learn more about MCJ Collective, visit us at www.mcjcollective.com. And if you have guest suggestions, feel free to let us know on Twitter @mcjpod.
Cody Simms (44:10):
Thanks and see you next episode.
