Episode 90: Rich Sorkin, Jupiter Intelligence
Today's guest is Rich Sorkin, Co-Founder & CEO of Jupiter Intelligence.
Jupiter provides data analytics to help governments, corporations, and society manage risks from climate change, natural disasters, and sea level rise. Led by industry veterans and distinguished experts from across disciplines, the firm offers services to predict weather risks from one hour to 50 years into the future.
In his three-decade-long career as a Silicon Valley serial entrepreneur, Rich has led breakthrough companies in numerous industries. He has focused on commercializing transformative technologies, with a significant concentration on financial services, energy, media, politics, and the environment.
It's great to hear what Jupiter is doing in this area and learn more, not only about Jupiter and their role, but also about the topic of adaptation and resiliency in general, where we are, where we need to be, and how to get there.
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:
Jupiter and its mission
Rich’s journey from data analytics to climate change
Parallels between the opportunity around cybersecurity and climate change
The importance of physical climate risk
How Jupiter initially narrowed its focus on flood risk
How Jupiter develops a “peril model” to assess the risk of flooding and fires
Profile of Jupiter’s customers
How critical infrastructure companies represent a major customer
Why insurers are not the ones who bear the financial risk of worsening climate disasters
Corporate indictments as a symptom of unaddressed climate risk
The U.S.’ “armed lifeboat diplomacy”
Jupiter’s nonprofit work
Resilience planning in the face of climate-related catastrophes
The need to restrict land use in at-risk areas
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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 Rich Sorkin:, the CEO and cofounder of Jupiter Intelligence.
Jupiter provides data analytics to help governments, corporations, and society manage risks from climate change, natural disasters, and sea level rise led by veterans of fortune 100 companies, machine learning and satellite pioneers, a Nobel prize winner, and scientists from NOAA and the national science foundation, the firm offers services to predict weather risks from one hour to 50 years into the future. The company was founded in 2017 and has raised over 30 million in funding to date over three rounds through a mix of strategic investors, venture firms and high net worth individuals. I was excited for this episode because while of course it's important to reduce our emissions and it's also important to remove carbon from the atmosphere, adaptation and resiliency are hugely important topics that don't get enough attention, mindshare or resource. It's great to hear what Jupiter is doing in this area and learn more, not only about Jupiter and their role, but also about the topic of adaptation and resiliency in general, where we are, where we need to be, and how to get there.
Rich Sorkin:. Welcome to the show.
Rich Sorkin:: Pleasure to be with you and big fan of the podcast.
Jason Jacobs: Thank you. Well, big fan of Jupiter, and I don't know if I'm supposed to admit this, but this is our second attempt due to a painful and frustrating technical glitch to us both.
Rich Sorkin:: Oh, that's between you and your audience.
Jason Jacobs: But yeah, so glad to have you here and excited to dig in because adaptation, resiliency, I mean, these are important issues that don't get enough air time and one way or another are going to get more in the months and years to come. And I'm glad to hear you guys focused on this area and kind of pioneering and excited to dig in and learn a lot more about it.
Rich Sorkin:: Thanks very much. And it's been a super exciting three years to get to this point.
Jason Jacobs: Is that all? It's been three years, man.
You've made a lot of progress in those three years.
Rich Sorkin:: We have, and the world's evolved quite a bit in the last three years as well.
Jason Jacobs: So what is Jupiter, first of all, do I call it Jupiter or Jupiter Intelligence? What's the official name?
Rich Sorkin:: According to the lawyers, it's Jupiter Intelligence inc. But that was just because we couldn't get the trademark on Jupiter as a standalone, at least not yet.
And generally everyone refers to us as Jupiter.
Jason Jacobs: Okay, well what's Jupiter?
Rich Sorkin:: So Jupiter is one of the world leaders, if not the world leader in predicting the risk and impact from severe weather and climate change and the return on investment in new applications of resiliency investments.
Jason Jacobs: So basically it is forward looking prediction to help with planning?
Rich Sorkin:: Yeah. We work in three sectors, big asset owners like power companies, financial services like mortgages, insurance, asset management, and then the public sector. And essentially each one of those sectors and even sub sectors is this a little bit differently, but we provide them a forward looking view of the rest to their region or assets factoring in climate change and in terms that are relevant to their business or municipal government.
Jason Jacobs: So how did Jupiter come about? What's the origin story?
Rich Sorkin:: So I personally have been very interested in climate change for quite some time. From a professional perspective, I'm more of an analytics person in general across large corporate enterprises. But in 2015, I was doing some work around aerial methane detection for another company that I help start and thinking about climate change. And keep in mind that this was just before the U S 2016 election and was just sort of looking at what was going on with climate change and the dialogue around that. And it occurred to me that almost everyone was focused on this question of emissions and bending the emissions path and reducing climate change. And that is, of course, an extraordinarily important area that has a lot of very smart, extremely motivated people working on it even more now, but essentially missed the dynamic that the climate had already changed.
What's continuing to change and that most likely the admissions path was not going to bend in a meaningful way in the next five years, maybe 10 years. And there were a whole set of practical implications of that that almost no one was thinking about. And that decision makers didn't have. Easy to use, scalable tools for understanding these impacts, like with every other kind of enterprise risk management that exists.
Jason Jacobs: Did you just happen upon this information or were you exploring it as a thesis? What turned you onto the theory in the first place?
Rich Sorkin:: That's a great question. It was an almost magical confluence of events. So as I mentioned, I was interested intellectually and what was going on from a climate change perspective.
I'm a data and analytics guy, and it's one of the most interesting sort of data analytics science questions you can have. Secondly, more because of my business and technology background, I'd gotten involved in a company doing aerial methane detection, which methane emissions are one of the key drivers of climate change. And as a result was, you know, essentially working in this space, not around physical risks, but around climate change more generally. And I also was doing some work related to NOAA a policy more generally because I had a prior company that was in the weather space. And so all of these things kind of came together and I was thinking about what to do next.
And I had an aha moment along with some of my colleagues of there's something here in climate change impacts, and at the time I was looking at three or four other business opportunities, some that were related to prior work and whether other cofounders that I'd worked with before, we were collectively kind of going through these ideas and saying, which one is sort of the most interesting from a economic opportunity, intellectual and social impact perspective. And each one of the three sort of scored differently, but the physical impact of climate change very clearly we thought was socially transformative. We could have a big positive impact on the world and was ultimately going to be a giant business, and we liken what we're doing to cybersecurity 10 years ago, so 10 years ago people really were saying, you know, cybersecurity, what's that? Why does it matter? 10 years later, everyone on the planet knows it's important and is paying significant amount of money for solutions around cybersecurity.
Three years ago when we first were starting the company, we said, physical climate risk is going to be important, and most people we talked to said maybe, probably not for us, and we had some visionary investors that saw that where the world was going beginning of 2020 I don't think there's any serious business person on the planet that would say.
Physical risk from climate change isn't an important thing to understand. Now what everyone is focusing on is, okay, well what does it really mean for our business? How do we tactically integrate this in to our decision making and whom should we work with as our partner in the AVOs in January? physical risk is important.
I gotta tell ya, December last year, like literally 45 days ago, as I was doing business planning for 2020 I was like, I think it's going to happen in 2020 but we have to be prepared for, it's going to be more slow and it might be 2021. It was like people came back from vacation. I realize I'm a little off your question.
What's the origin story? But literally it's like people came back from winter vacations at the beginning of this year and said, climate change is top of our list.
Jason Jacobs: We've talked about the problem space that you're going after and how you got to going after that problem space. But once you had that aha moment, which of course was the culmination of many other incremental aha moments to get to that point, but once you put those pieces together, how did you go from that to where you are now and where did you start and what were kind of the steps in 30 seconds or less?
Just getting about the last
Rich Sorkin:: From the aha moment, the first thing we needed to do was raise money so we could build a team so we could build products so we could sell.
Jason Jacobs: So pre-product that vision and track record of the team you raised money.
Rich Sorkin:: Yeah. I mean, we raised a remarkable amount of money just on the emails.
$10 million took us about a month to raise from the time we started. So that went very well. And then we recruited the team, and I think the intersection of who the founders were, not me, but you know, some of the other people from a science and technology perspective, the importance of the issue, the fact that by the time we raised money, there was new president and the federal gun rule from this area, and just the importance of the issue.
Allowed us to attract them, the very, very top people in the world fairly quickly. And then, you know, even before we knew what we were building, we said, Oh, well let's go out and talk to potential customers. And we'd done a certain amount of this before we raised money, but now it was like, there's a real company, there's people, there's $10 million of product development that's underway and very different substantive conversations.
And we talked to different sectors or we talked about different perils like flat and fire and wind and green key. And in 2017 the only folks that were really spending money were big cities, at least in the United States. We didn't have the scale to kind of tackle Europe or the rest of the world at that point.
And so we cut our teeth with our work with New York and Miami, and then the federal rebuild by design program, which is part of that. Plus the ongoing development work established the credibility, then start working with the enterprise market as they started thinking seriously about these issues. And the other part of that first few months was which peril?
And it came pretty clear quickly that flood was what most people were focused on. We had conversations in California and they said, if it's not earthquake or maybe fire, we don't care. In the same way that the Atlantic coast region cared a lot about flood and wind more so flood at the time. And so we got pretty quickly focused on flood, and only about three months after we were funded, we'd already been building kind of the core foundation that was peril independent, but there was a bunch of things that we needed to do. It really didn't matter who the customer was or which peril we did first, but within three months of funding, we had decided on flood, and I remember there's a set of a key group of us in May of 2017. We had just come back from meetings with New York city and a number of other for profit and public sector entities.
So it's going to be flood. And we literally specked out the first version of our flood service on a napkin at because arabesque kitchen. So we literally specked out the first version of the flood product on a paper napkin. It's service kitchen after a couple of days of meetings with potential customers.
Jason Jacobs: When you're doing flood forecasting, flood planning, or any peril for that matter, where does the data come from and how much of it is known?
Rich Sorkin:: The data comes from a combination of sources. Let me explain the architecture of what we do first and then I'll come back to the data question. So we're predicting on a probabilistic basis the impact of range apparels starting with flood. Now we've got a pretty good set of perils that we deliver to customers for specific location, like literally down to one meter spatial resolution.
And to do that well, you need the current and future state of the weather, the current and future state of the terrain, and then a peril model that takes those two sets of inputs and turns it into a simulation of the peril through time. So the building blocks are downscaling the climate models, which we do ourselves, but these are the global climate models that primarily are available from about a dozen national labs all over the world.
And then downscaling that information for planetary scale to specific regional scale and then translating that from the future state of the atmosphere to the future state of the weather and we're the best in the world at doing that at scale. Prior to Jupiter, people would do that kind of on a one off basis as a boutique exercise.
We now have a whole set of processes for doing that and then essentially have a digital model of an area. That also includes the terrain information, like how high is the surface? Can each location, what's the subsurface drainage? Is it concrete or is it marshland? And that data also is generally available, but we have a whole set of techniques for on an automated basis.
Including AI, which is also part of our downscaling of the climate models. Essentially improving the data quality of the terrain maps. Then we have a peril model. Think of it as a three D simulation of the dynamics of the peril. So for flood, it's the hydrodynamics of the weather tells you where the water starts.
But the hydrodynamics tell you where it goes and how much of it goes where. And the weather is both the storm surge pushing water on shore, typically from the ocean or could be river and then the precipitation both at the location that you care about as well as up river from that for something like fire, the things that matter are the atmospheric factors both today and in the future of temperature, wind, precipitation, humidity, but then also the terrain factors, like how much accumulated fuel is there and how close do people live to flammable areas. One of my favorite acronyms of all time is the "WUI": "Woodland Urban Interface," which is basically how close do people live to the forest and in what kind of population density, which is has nothing to do with climate, has nothing to do with atmospheric science, but it's one of the single most important factors in the likelihood of a fire. And then there's fire spread models, things like wind matter a lot. But also just data on what does the forest look like? So there's a tremendous amount of data, a lots of different types that go into what we're doing.
I've just barely scratched the surface. And sometimes public sector, sometimes proprietary sources that we commissioned, sometimes from commercial data providers, including the satellite providers, we're currently using aerial observations from light aircraft. We're very bullish on, as drones get more range drone inputs, but for a lot of what we do, we need to cover a large enough territory that brought drones are not cost competitive with something like assess Cesna, but for very small areas. We're using drone data as well.
Jason Jacobs: What does the customer base look like in terms of the size of that base and also how it's allocated by sector.
Rich Sorkin:: Conceptually, we touch every place everywhere on the planet, and that's the owners of the asset, the insurers, the asset, the lenders to the asset operating companies that run the business that might have shareholders like a big pension fund or asset manager as well as the host domiciles that are responsible for the health and safety of their population, and then also just being an attractive market for employers. So we literally touch everything, and that's a gigantic, multi-billion, ultimately trillion dollar opportunity. In terms of where people are buying today, the biggest sector for us today, and I think this is true for the market in general, is owners of very expensive mission critical infrastructure that's vulnerable to natural hazards and long lift. So that's things like power plants, manufacturing facilities, refineries, ports, you know, these are oftentimes multibillion-dollar individual facilities that are owned by entities that have dozens, hundreds, sometimes thousands of these facilities all over the planet.
And that's our biggest sector today. And we're in that sector, are working with engineering, capital planning, risk management, a little bit of shareholder disclosure, but real world business decisions that are independent of the risk class that they're used to thinking about risks over the time horizon of their operating assets.
And this is just another risk. And one of the big things that Jupiter says to our customers is, look put aside any of the politics and media attention to this issue and cause, think about it like a business risk and the other business risk you have in your company that you can't ignore. And assess it based on its relative importance from a business impact perspective and based on that, give it the appropriate management attention and capital it deserves.
If any other constituents, any company that thinks about it that way, is going to allocate resources to dealing to understanding and dealing with this risk because it's too big an issue to ignore it. And then our second biggest sector is financial services, mortgages, asset management and insurance, and then public sector big important, but has shrunk as a percentage of our business, basically for two reasons. One, the commercial market has just gone from zero to a hundred over the last three years and, two, public sector is subject to budget and procurement pressures that are much harder to navigate for those decision makers than private sector entities.
And when the reality is in most places of the world, taxpayers don't want to pay the real costs of the impacts of climate change. And that's true for consumers as well. There's only now growing groundswell beyond just kind of innovators and early adopters among consumers to, "you know what, I'll pay a little bit more for my product so that it's used producing materials and power that emit less."
But most consumers, the vast majority of consumers are not ready to do that. And one of the huge challenges in places like Florida is taxpayers by and large, don't want to pay for it either. They're perfectly happy for the federal government to step in and say, yeah, we'll cover it. Or the national flood insurance program will subsidize the rest, but they don't want to pay higher prices for insurance.
They don't want to spend $100 billion of city and state money for infrastructure that ultimately in places like Florida have to get spent.
Jason Jacobs: I may have missed it, but I don't think I heard in one of your customer verticals, the insurance companies, so where do they sit in terms of all of this? Are they doing it in house, or how do they think about the kinds of things that you guys do?
Rich Sorkin:: Yeah, I would say to a very large extent for insurance companies today, this is a marketing issue and a niche business, and the fundamental reality for that is something that the business world is increasingly coming to understand, which is duration mismatch. So insurance gets repriced in some cases, approved or disallowed every year.
And so the insurance companies don't really hold this risk. People think that they hold this risk. But they don't. They all don't. And in a given year and as the risks go up, which we know they are, they can just increase their prices or maybe the regulators won't let them increase their prices. And then you see catastrophic impacts for communities like in California where insurance providers are trying to pull out a fire insurance in California because the regulators won't let them charge the true cost of the rest.
That's going to have to play out. And ultimately, I think the California state government will be subsidizing an awful lot of fire insurance, like the U S federal government subsidized flood insurance.
Jason Jacobs: I guess the confusing thing for me though, is if they come up every year and need to make this decision on an annual basis, then when they go to make that decision, why isn't something like a Jupiter informing their models.
Rich Sorkin:: Who's making the decision?
Jason Jacobs: On whether they continue to insure those homes, for example.
Rich Sorkin:: Remember, this is a slow moving risk, so over five and 10 years, it matters a lot to them from a business perspective, but in the short term, it matters a lot more to a mortgage holder that...
Jason Jacobs: So they're lagging.
The insurance companies are lagging. It's just if they have a year that's too much in the red, then they'll change it. They go by the dollars and not the catastrophe data.
Rich Sorkin:: And the regulators won't let them change their prices yet either. So there is a crisis coming in insurance that is going to have to get resolved, but it's very easy in the short term, absent some catastrophic event like fires in California in Australia.
For them to just say, okay, well we'll get to it.
Jason Jacobs: So where are we? Just as a, I mean, this is such a hard question. I was going to say, where are we as a species in terms of adaptation and resilience? But it's very hard to ask that when you compare like the West to developing countries to, I mean, it's just so different in different parts of the world.
Rich Sorkin:: But there is actually a very general answer to that, which is the vast majority of the world is just waking up to how soon these impacts are relevant.
And how much money they need to spend to adapt to the new atmosphere and that's true everywhere.
Jason Jacobs: So in your view, and I mean, you guys make money either way. If you get really good at this, it's going to be valuable to somebody. So I guess putting you guys aside for a moment, who should bear the brunt of this?
Should it be like, I've heard certain arguments from people that, in order to get the market to move, people and companies need to feel real pain and that that pain will actually be a catalyst to help accelerate the transition that we so desperately need. Is it on Joe consumer? Is it up to the government to step in with government thick and increase everybody's taxes?
Like how do we do this?
Rich Sorkin:: Just to be clear, you're talking about physical risk or ambitions?
Jason Jacobs: So there's a general climate thing, but I think for the purposes of my question here, I'm talking about resiliency of infrastructure.
Rich Sorkin:: I think the view that you just described attributed to other people is slightly out of date.
It was true six months ago, 12 months ago, two years ago. I jokingly commented earlier in the interview that it's like people came back from their winter holidays and said, this is the year of climate. McKinsey published a really high quality report on this issue in January. BlackRock published a whole set of policy directions on this in January.
The world economic forum identified based on their own surveys, not their own opinion this is a top issue. For the enterprise market, and I think 2020 really is the year where the enterprise market, you had pure self interest and demands from their stakeholders in the developed world starts to take these issues seriously regardless of consumer pressure.
Jason Jacobs: Which piece of the view that I had mentioned is outdated now, and I'm not questioning. I just want to understand to make sure I have the context right.
Rich Sorkin:: That it's ultimately going to require consumer or voter pressure. I thought that's what I heard you say.
Jason Jacobs: So I had someone on who's got a hedge fund that is essentially offering a short position on big residential real estate holdings in areas that have not properly factored in climate risk.
And he stated in our episode that in order to get the markets to move at the pace that they need to move, that it's going to be painful, and that that pain in a unfortunate way is actually healthy.
Rich Sorkin:: Well, I think everyone likes to think they're the lever. We don't think we're a lever. We think we're a way to manage once people have come to the realization that they have this issue and we like lots of levers, but I think the stakeholder pressure is going to drive and really depends on who you're talking about. And we haven't even gotten to the public sector yet, which I'll come back to in a moment, but I think in the enterprise market, the big companies with big assets, they're not going to get moved by getting traded against.
They're going to move based on the ROI. The shareholder impact and CEO's getting indicted. So there's one bankruptcy PG&E. And then there's two CEOs of global 2000 companies who have been indicted for environment related issues being negligent on these issues. That gets a lot of attention. I think we're going to see more of that and it will be impossible to waive these risks aside from a corporate governance perspective.
Us shareholder demands, employee demands, reputational effect, and management. Then word liability. Now in mental services. I haven't yet seen a trade against an insurance company. That would certainly be somebody that mortgages. There's a lot of reason to believe that there's going to be trading against mortgage portfolios.
Some folks who are working with Jupiter data, they recently published on this, that there's adverse selection by the government, the GSEs, like Freddie Mac and others like that, where the banks are essentially selling uh, is weather and climate risk, the DSEs and, and the new chair of bets. That's something the reinsurance industry needs to be paying attention to as well, or to the newer now.
Then there's the public sector and the public sector is entirely driven by voter support for various different measures. And I think, unfortunately, some of these economic impacts are going to come home to roost faster and the public sector can respond in most parts of the world because of voter sentiment issues.
Jason Jacobs: So when you look at where we are and where we need to be, I've heard from you that the symptoms are going to get worse and that will lead to indictments or people getting fired or lawsuits or things like that in that it will lead to an awakening of the private sector out of self interest to make sure that they're protected.
Is that it? And the market will kind of take care of itself or others, other levers that you think would help accelerate this transition effectively?
Rich Sorkin:: There's this concept in geopolitics, armed lifeboat diplomacy, which the United States in some respects seems to be following, which is wall yourself off, keep everyone out.
And protect your own assets and the rest of the world can take care of itself. That is a very scary world and something to be avoided if we can, and I don't think the private sector on its own really has enough scale to invest in all the resilience measures that are going to be needed, and the public sector is going to have to play a very big and important role.
And ultimately that will come down the voter temperament. So you're saying economic self interest is sufficient. And that said, I think is a very, leads us to a very mad max like world. So I wouldn't say that's it by any means. And it also results in kind of a Darwinian regional competition where countries and regions do a good job, the attractive areas for ongoing investments in infrastructure of all kinds and knowledge workers to knowledge workers are mobile. They go where it's attractive to work. And flood and fires make places like Sydney awfully unattractive for knowledge workers. So I think some regions and some countries are going to get this right. There will be big winners.
Capital and knowledge workers will go to those areas and other regions that can't get their act together. We'll be major losers over the next 10 to 20 years.
Jason Jacobs: I mean, I know you have a fiduciary responsibility as the CEO of a company that's raised external financing, and it has a bunch of employees and mouths to feed, et cetera, to go where the money is.
But one of the things that I personally wrestle with as I've been on this journey is the issue of environmental justice, where the folks with the money can take the steps to protect themselves and their assets, but the folks that are most vulnerable are oftentimes in the places that are also going to be first affected or are already the first affected by some of the perils that come with the changing climate.
So not rich the CEO, but just rich, the human. How do you think about that topic?
Rich Sorkin:: First of all, this is an extraordinarily important topic. I'm going to come back in a moment, but I disagree with the way you look at the company. You know, sort of your profit perspective. So we've now invested over $25 million in reusable services that are equally valuable to NGOs and small cities and countries as they are to big companies.
And in order to continue to invest, we have to show a profit and be responsible stewards of our capital. And the revenue for that is going to come from large corporates and maybe the top 10 or 15 countries on the planet. So we have to do that well, but just because we have to do that well, it doesn't mean that it's the only thing that we do well.
And so we have, from the very beginning, we've had a nonprofit work breakeven component to our business. Our public sector work is typically not very profitable, at least at the municipal level, but we're able to do that because most of the R and D is already covered by the revenue coming from our for profit companies.
And we have as a deliberate policy and nonprofit work where quite frankly, we'd like to be doing more of it, but every time I say we have room to provide nonprofit services, there's a lot less interest in that. Then we're getting on the commercial side, and I think it's partially because nonprofits don't [INAUDBILE] but we are doing a certain amount of non private work. We will continue to do so. And in the meantime, or working with other partners, we help publish a paper on climate gentrification in South Florida. That was based on a combination of economic data from our partner and the risk data from us. It's a crucially important issue. And you know, if you're a steward of a for profit company and then there's a lot of reason to believe that we're not doing a good enough job collectively, I say Jupiter specifically, good. Collectively, we're not doing a good enough job. To maintain support of voters in advanced democracies for the capitalist system.
And that's got to change. A lot of people. See, it's got to change, whether that's around wealth and equities or disparate impacts of climate risks, because the capitalist system is, I'm gonna get very philosophical here, but it's fundamentally grounded in a set of economic views that require that the stewards of capital are doing the best possible job.
And if we're not, things will change. And you can go all the way back to John Locke and what way they wrote it up. See the government underpinnings of capitalist system.
Jason Jacobs: And so in order to help that narrative and maybe build bridges with some of the resentment, what's the issue? Is that resentment valid?
And if so, what is it that's broken and how do we fix it?
Rich Sorkin:: In the capitalist system, generally?
Jason Jacobs: Yeah, in the capital system generally.
Rich Sorkin:: Well, I mean, clearly there's too much wealth and inequity. And then beyond that, the system is not responding to all set of risks that exist that impact ablation. Voters will not continue to support a system that's solely producing billionaires or not addressing general needs of the population, including their vulnerability to these climate risks and impacts.
Jason Jacobs: So what changes do you think we could make to the system to offer outcomes that are more widely distributed?
Rich Sorkin:: No, I'm happy to talk about that another time. I think that's a bit outside the scope of, of Jupiter. I like to focus on the issues related to climate change, and clearly the planet needs a global agreement on addressing emissions.
And clearly there needs to be more spending on resilience at all levels of the system that takes into account the future risks to all of these assets and where people live. Like if you have a road that floods. Yeah. You can't evacuate. In the case of a natural disaster, that's a problem. And the United States and most of the developed world is building roads without any regard to what the flood risk looks like 10 years from now for a road that's going to be there forever, maybe not forever, but for most people's lifetimes. The policy of the U S federal government around this is literally insane.
Jason Jacobs: So if you had $100 billion, whether you're the government or your big brother, looking down on the government, whatever it is, and you could allocate it towards anything to help accelerate this transition effectively. And I guess typically when I ask this, I ask it about the clean energy transition and addressing climate change overall.
But you can actually take this either way, you like, you can take that one, or you can take around getting our infrastructure resilient and protected to minimize the suffering from the change that's already built in. So I'll kind of leave that to you, but pick one of those and tell me how you allocate the money if you had it.
Rich Sorkin:: First of all, $100 billion is not nearly enough, unfortunately. People are just coming to understand that and let me sort of tick through the things that I would address. One, the country's approach to rest and subsidizing high risk areas where people live and continue to build is crazy. We should fix that.
There's a tremendous amount of voter resistance to that. Two, we're going to have to pick regions where we harden and areas where there's managed retreat. Voters hate that to. Three, we absolutely should require that any new spending of long lived assets, factors in not today's vulnerability, but the vulnerability in the life of that asset.
And either a stairstep method, which says, we're going to build this in such a way that the incremental cost of hardening it down the line when the risk hit is much lower because we thought it through in advance, or we're just going to build it to anticipate those risks in the first place or not going to ignore those risks.
I think that's three I'm up to. Four, regulated industries that don't account for future risks around things like rate basis for power or the setting of private insurance rates have got to account for future risks in ways that regulators are very resistant to today. Again, voters don't want to pay more, so that's, that's a handful of things.
They're all politically undesirable, but ultimately voters are going to have to support them or we're just going to ignore these risks.
Jason Jacobs: And what about for the people that are listening to the pod? They tend to be people that, I mean, one, they're voters, but outside of voting, there are also people that are serious about trying to either actively working to address these issues, whether it's emissions reduction or carbon removal or adaptation, resiliency, et cetera, or people that are looking to reorient themselves and focus on these at the systems level in their next chapter.
So I guess speaking to them for a moment, what advice do you have for them in terms of how to go about finding their lane and how to be most impactful towards addressing whichever piece of the problem they feel like they're best equipped to do so.
Rich Sorkin:: It's a great and really important question. I'm going to start by talking about Jupiter just for a second.
Hopefully, you see why in a moment. When we started the company and we went to businesses and said, you should be thinking about these risks. A lot of people said to us, well, but we don't even know how. What would we even do? What are the tools that are available? And candidly, before we ever launched, our first services are like, well, there aren't really a lot of services there, but they're coming and you should buy them when they come.
And obviously there was a certain amount of self interest in that, but I was very sympathetic to the folks that I was trying to sell to because. Even where they said, Hey, yeah, you're right. We think there's an issue and we should do something differently. They were hamstrung because they didn't have the tools to do something differently.
And I think voters and consumers face a similar challenge now. So there's a lot of noise around what people believe and what they say they're going to do around climate change. And here's a little bit of a Goldilocks problem of some people say, which just get rid of the capitalist system or the worst aspects of the capitalist system, and we can't address climate change unless we do that.
And other people say, no, we should approach this just like any other issue. But give it. The priority that it deserves. So even in that, there's a lot of noise that voters are still sifting through, but I think the number one issue for voters is they're going to have to pay more. They're going to have to suck it up with things that are unpleasant and not exactly what they want tomorrow if they want to be prepared for a better future. For consumers, I think it's a different story. There are a lot of consumers that will say, look, I want to behave as a consumer in an environmentally responsible way. It's just hard to know what that means or some big obvious things.
But look, the vast majority of what American consumers buy has a production component. In countries, including China, especially China, where the vast majority of the emissions are coming from, and yet we continue to buy those products. So I think until there's a robust analytics around how much emissions is actually in the sweater that you're wearing right there.
Do you know? Right. How it was produced, what the energy source was for it, but the environmental standards around the raw components for producing that sweater. If you don't know any of that, do you?
Jason Jacobs: I don't know. And what about one stakeholder group that you didn't mention, which is actually the one that probably has the biggest percentage of listeners is aspiring founders.
So if people want to follow in your footsteps and find a lane where they can do well while doing good towards some aspect of this problem, what advice do you have for them?
Rich Sorkin:: Just in this issue that we were talking about now? I think there's a big opportunity for someone to do a much more sophisticated job of what's the emissions content of every single product that consumers buy and how good, and there's some work being done in ESG around how responsible the companies are. But I think ultimately there's a lot of power in consumers that are informed and not just making kind of feel good decisions.
Jason Jacobs: Rich, I feel like we've covered a lot of ground. Is there anything I didn't ask that I should have or any parting words for listeners?
Rich Sorkin:: This is a huge, monumentally important problem. We're not doing a good job of it. We collectively, as a species, are not doing a good job now, but the opportunity to get it right across all of these dimensions, consumers, voters, companies, national policy, geopolitical agreements on a global basis is still very much in front of us and there are enormously important issues. And yeah, and I would encourage all of your listeners, whether they're entrepreneurs or not, to think about what they can do in the various different dimensions of their lives and look for ways to do things better.
Jason Jacobs: Great. Well, thank you for all of the work that you do and thanks for making the time to come on and share it with all of us.
Rich Sorkin:: My pleasure, and similarly, thanks to you for telling both our story and everyone else's story in this colossally important area, and feel free to have me back anytime.
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 my climate journey dot C. O. Note that is dot C O. not dot com. Someday we'll get the.com, but right now dot C O. You can also find me on Twitter @jjacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear.
And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
