Capital Series: Jeff Johnson, Temasek
This episode is part of our Capital Series hosted by MCJ partner, Jason Jacobs. This series explores a diverse range of capital sources and the individuals who drive them. From family offices and institutional LPs to private equity, government funding, and more, we take a deep dive into the world of capital and its critical role in driving innovation and progress.
Jeff Johnson is managing director at Temasek, where he leads the US-based Sustainable Investing team. Temasek was incorporated in 1974 and is an investment company headquartered in Singapore.
Supported by 13 offices across nine countries, Temasek owns about $382 billion or US$287 billion portfolio as of March 31st, 2023, mainly in Singapore and the rest of Asia. We have a great discussion in this episode about what the charter of the Sustainable Investing Team is, how Jeff found himself doing the work that he's doing today, what criteria they look for when they make investments, and, of course, how their investments fit into the broader climate tech landscape and the energy transition overall.
Enjoy the show!
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Episode recorded on Oct 13, 2023 (Published on Nov 8, 2023)
In this episode, we cover:
[2:10] An overview of Temasek
[4:13] Different lines of business at the firm and where sustainable living sits
[8:44] Jeff's background and career history
[18:58] The CEO's mindset for Temasek's approach
[21:44] Jeff's role at the firm
[24:22] Lessons he learned about the space and future projections for Temasek's impact
[26:26] The balance between thesis-driven investments vs opportunistic ones
[33:55] Temasek's direct and fund investments
[38:39] The firm's performance measurements and market entry points
[46:51] Temasek's role in debt financing
[51:07] The types of companies and projects best suited for Temasek's capital
[56:48] Jeff's response to folks who are worried about the risk of investing in climate tech
[58:51] The need for a balance between experience and beginner's mindset in picking winners
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Jason Jacobs (00:00:00):
Today on the MCJ Capital Series, our guest is Jeff Johnson, managing director at Temasek, where he leads the US-based Sustainable Investing team. Temasek was incorporated in 1974 and is an investment company headquartered in Singapore. Supported by 13 offices across 9 countries, Temasek owns about $382 billion or US$287 billion portfolio as of March 31st, 2023, mainly in Singapore and the rest of Asia. We have a great discussion in this episode about what the charter of the Sustainable Investing Team is, how Jeff found himself doing the work that he's doing today, what criteria they look for when they make investments, and of course, how their investments fit into the broader climate tech landscape and the energy transition overall. But before we start-
Cody Simms (00:00:53):
I'm Cody Sims.
Yin Lu (00:00:54):
I'm Yin Lu.
Jason Jacobs (00:00:55):
And I'm Jason Jacobs. And welcome to My Climate Journey.
Yin Lu (00:01:02):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:01:07):
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 (00:01:20):
And with that, Jeff Johnson, welcome to the show.
Jeff Johnson (00:01:23):
Thank you, Jason. How are you?
Jason Jacobs (00:01:24):
Okay, yeah, we were just talking before we hit record, but there's a lot going on in the world, but the show must go on here. And yeah, really eager for this discussion. I think that we're on a few cap tables together, and I think Temasek's name is coming up more and more in the ecosystem, and we've met several times, but I don't think we've ever just kind of done a deep dive on what you guys are up to, how you're thinking about the world.
Jeff Johnson (00:01:45):
What better way to do it than on your show. So fantastic.
Jason Jacobs (00:01:48):
Yeah, exactly. So now I can ask you... Actually that's the interesting thing about podcasts too, is that although it's public, you end up learning a lot more publicly than you would privately one on one, because privately one on one, we’re more inclined to just jump to the business at hand. And it’s like, “Tell me the history of Temasek.” That’s not going to come up if we’re in a 30 minute coffee meeting. At any rate, what is Temasek? Maybe we'll just take it from the top.
Jeff Johnson (00:02:10):
Temasek is an investment company headquartered in Singapore. It's got a really interesting origin story. After Singapore became an independent country, it had capacity building companies in the country, like the port and the airline and things like that, and it was decided that it would be better managed through a separate entity. And that was where Temasek was created. And the beginning of the firm was really about growing and managing those Singapore-based businesses. Those were successful and grew and, so we looked to then invest more broadly. And that portfolio has now grown to be a little bit shy of 300 billion USD. So it's been a tremendous success.
Jason Jacobs (00:02:57):
From what I can gather, as a firm, it seems like investing and then working with the companies in the portfolio is the main activity. Is that the only activity, or do you have internal operating lines of business as well?
Jeff Johnson (00:03:08):
We have multiple engines, we call them. We've got an investment engine, a development engine, a partnership engine, and so we work across a lot of different modes of operation in order to build out the portfolio. We have our very large Temasek portfolio companies, these large businesses that we've had a long time in the portfolio, and continue to work with those teams to make them successful, unlock value. I mean, management runs the company, but we are engaged with them.
(00:03:34):
That would be things like Singapore Power, the ports of Singapore, Singapore Airlines, but I found out not too long ago, we actually also own the zoo in Singapore. So it's a pretty broad set of businesses. Beyond that, we do have a funds investment business. We do have a structured credit business. We have things we do in real estate, so it's pretty broad. In the core investment business, we have a number of different verticals we cover. In the US, the largest today are technology, consumer financial services, and life sciences. And I'm working hard to make what we call sustainable living, which is the theme we invest, behind the fourth leg of the stool, if you will.
Jason Jacobs (00:04:13):
And maybe just double click on that and give, for me and for listeners, a little more of a lay of the land in terms of a framework of the different lines of business at Temasek, and then where you sit and where sustainable living sits within the overall firm.
Jeff Johnson (00:04:27):
We have developed a pretty broad ecosystem within Temasek, and so we have done a lot of work to set up different kinds of investment platforms and teams and partnerships. I think as a firm, the philosophy is to find great partners to work with and really lean into those. So it would take really all day to break down all the different things that we have and do. But maybe I'll highlight a few relevant for the topic at hand regarding climate and decarbonization. So one thing that we have done, is we have set up an early stage emerging technologies team. They're doing a lot of work to invest both in some funds and some direct investments, very much focused on the early end of taking technology risk where we can identify opportunities to scale disruptive solutions. One example of things of how the company and the firm works together is that team, along with a few others, came together to work with Breakthrough Energy Ventures to help with BEV Select, their growth fund.
(00:05:27):
So that's what kind of partnership that we have with an external party and with different teams within the firm. We set up alongside our partner BlackRock, something called Decarbonization Partners, which is looking to do late venture, early growth kinds of investments. And so that was BlackRock and Temasek leaning in and creating this new joint entity that was seeded with both of our capital, and seated with some of our great team members to then go and build up another business. We set up a separate entity called GenZero, which is actually looking to explicitly take carbon risk, and really manage that holistically as an asset class, really. So anytime we're going to look to do things where we're underwriting to carbon price or where a carbon value is a core element of the investment thesis, we've set up GenZero to manage that.
(00:06:16):
We work with HSBC to set up something called Pentagreen to help facilitate deployments of assets in Southeast Asia. So we've done a lot of things to set up dedicated platforms and partnerships with different partners and stakeholders, and we think about best ways to amplify impact and really amplify our wider set of capabilities. And then what that does, is for the team within the core investment engine of Temasek, it lets us really focus on the areas that we think we can do best, which is really deploying later stage growth capital and all the way up through public markets, and really looking to help facilitate real growth in companies and industries that are ready for it.
Jason Jacobs (00:06:57):
Jeff, what's your purview across those areas?
Jeff Johnson (00:07:00):
The team I have the privilege to lead is really focused on, again, sustainable living investment trend here in the Americas. And what we've done with that is really looked to identify businesses and industries that we think are able, from a unit economics perspective, to deliver solutions that can displace legacy incumbent solutions, and look for industries that are really ready to adopt those solutions. It sounds really simple, but it's actually quite difficult, having been in the climate space for a long time and having seen things stop and start, and promising ideas not really go anywhere, getting that equation right is really hard.
(00:07:41):
And so, I think we spent a lot of time really trying to understand where technology maturities are, where market maturity is at, where we're really going to see inflection points of growth and spend larger amounts of capital there because we think that's where we can earn the right returns. And as a steward of someone else's capital,, I mean, really trying to make sure that you are laser focused on finding opportunities where you can then earn appropriate returns is important. We can earn the right to do more when we are showing we can deploy capital well and earn financial returns for doing so.
Jason Jacobs (00:08:14):
Well, that's a great frame, and I have a ton of questions that I'm dying to ask to start getting underneath the surface of that frame, but I want to resist that temptation and first just ask you a bit about your journey that led you to doing the work you're doing and to Temasek, especially given that you've worked in many different stages and types of businesses over your career. So I'd just be personally interested to hear how you got to Temasek and what led you to believe this was the place where you could have maximum impact in this chapter?
Jeff Johnson (00:08:44):
I had, definitely, a non-linear career. I think I've learned a lot as a result of it. I'm a mathematician engineer by training. My first job was at Intel building supply chain optimization software, and then I had the opportunity to go to MIT for graduate school and I thought I was going to get my PhD and teach. That was my original plan. And then I blasted through most of my coursework, mostly in sort of electrical engineering kind of stuff, and realized that I wasn't sure I wanted to be professor and write. I really liked working on things and building things. So I wrote a master's thesis, got a master's degree, and took some time off and went back to Silicon Valley, and worked on enterprise software startups.
(00:09:20):
So I was the quant -math nerd building models to work on pricing optimization in a few different contexts, and it was intellectually fun and interesting, but just then 2007, and this question about, how do you work on something that matters? How do you work on something that you're excited to get up and do every day? And trying to help large industrial companies make a little more money by pricing their products better, it wasn't doing it for me, so. So I came out to the West Coast to work on the boldest, biggest problems like the world had and what was that? And for me, thinking about that and reading, et cetera.,, climate jumped out to me and at that time that that was going to be the big thing.
Jason Jacobs (00:10:00):
What general timeframe was this?
Jeff Johnson (00:10:02):
It was 2007, is when I was thinking about that. For me it was this question of you have to really remake the entire global economy because the entire global economy is built on something that carbon pollution is fundamental to how it works. And so I've always been an interdisciplinary systems thinker kind of person, so, for me, what bigger problem to try to solve than that? So again, living out in Silicon Valley said, “"Okay, what's the boldest, craziest, biggest thing that I could try to get involved in?”?" Looked around and talked to people, and came across this company called Better Place that was trying to figure out how to disrupt the transportation industry and the energy industry, and go really big as fast as possible. And I said, wow, it's either going to work well and be really big company or it's going to really not work well and I'll learn a lot. Either way, It's going to be a great way to get involved in the industry.
(00:10:54):
So I was one of the first couple dozen people at that company, and we could spend a whole podcast talking about that business. Those, those that have been around or familiar with Better Place, and it was one of the big clean tech 1.0 businesses. For me, it represented an opportunity to get involved in the industry and take starting out as a quant nerd, started building financial models and talking to investors and talking to partners, and had the opportunity to start to learn the business side of things. And so, the great thing about a startup is you end up being able to be thrown into opportunities and roles, and get to do things you might not on paper be qualified to do, but you're given the opportunity to think or swim. And so, for me, it was a great opportunity to start to put together different kinds of financings, understand how to navigate a term sheet, how to navigate negotiations.
(00:11:47):
We were working on equity rounds and financing EV charge spots in Denmark in 2009, and thinking about how to set up a business in Australia and how to negotiate with car companies and electricity utilities, and it was just a fabulous place to learn and to grow, and had a fabulous set of colleagues that we got to work with to do that. I also learned the challenges, I think, and you bring, especially in the climate space, this mindset of maximum disruption –, bring a software, move fast and break things mindset to an economy in a world that's not set up that way. There's bound to be challenges and friction. We certainly saw a lot of that. And for me, personally, in the space, I kind of came to the conclusion that if I was going to be good at this, I really needed to understand how incumbents think and work. And aside from my little bit of time at Intel early on, I didn't really know how big companies worked. And, and I thought that that connectivity between big companies and startups was going to be critical, to scaling this climate industry.
(00:12:46):
So I did perhaps what many people thought was slightly crazy, which is I joined a big European company and moved to Zurich. I had the opportunity to join ABB, which was a fantastic company, great team. It was run by an American CEO at the time, who was really focused on innovation and growth. And for me it was a great opportunity to step in and contribute something, hopefully, and learn a lot. I moved my family to Zurich, and had the chance to work to scale businesses across our power and automation portfolio. So couldn't have been a more different environment going from the slightly chaotic, or not slightly, quite chaotic, Better Place startup to a company like ABB, you know, 140,000 people at the time, global operations. You started thinking about growth as whether it was how many basis points above GDP, which is a very different way to think about what business growth looks like, but for me it was a fantastic opportunity to see how businesses like that worked.
(00:13:43):
You had the opportunity to lean in and help my colleagues put together and scale some businesses we were doing in the EV bus space and EV charging, and things we were doing around data centers,. And had the opportunity to work with our CTO to overhaul the R and D organization to be more focused on business outcomes, so kind of large -scale change management. So it was fantastic, learned a lot, but then we had a CEO transition and the priorities of the business changed, and I decided it was time to come back home to California.
(00:14:10):
This is now 2014, 15, and Jason, that was not a good time for the climate space. The Clean Tech 1.0 enthusiasm had met with the challenges of the reality of things. A lot of the money had all gone away. I was really committed to the space. I really wanted to continue to make this impact of the mission I feel like I signed up for when I first joined Better Place, which is how do we really make this transition work? And so I ended up starting advisory business kind of… Got a few phone calls from different companies, different people to help out on things, and started a business on that and ended up doing that for seven years. So I had the chance to work with lots of different folks.
Jason Jacobs (00:14:49):
What types of projects, and also what'd you learn about yourself over this period, just in terms of where your skills are best suited, and also what gives you the most energy, professionally?
Jeff Johnson (00:14:59):
That time was a great time to figure that out because I ended up getting calls, mostly from a lot of European corporates trying to figure out how to navigate what was coming, where were the technology trends going, how do we invest capital? So one part of the business was that helping figure out how to set up some different investment arms and deploy capital and how to work with companies that think about M&A. But the other is, I think, I had this perspective that between startups and big companies and how to work through that, that a lot of startups found valuable in different ways. So I had the privilege to work with a lot of different teams to help them strategically think through complex issues, especially at that time. How do you build a business plan that is even finance-able? What kind of asks do you have of your corporate customers to help make it possible for investors to put money into the company?
(00:15:44):
And so what I ended up getting the chance to do is kind of take this breadth of experience and put it to work with lots of different people, and teams and organizations, and found that that sort of problem solving. People ask sometimes, “ What do you do?” I solve problems, that's the job. And thinking about these different opportunities and thinking about how you really unlock scale and growth, and having seen it not work and work across multiple different sectors and stages, is really fun to think about what that ends up looking like. So you go into these different businesses and really understand the technology might work, but the business model could be wrong. Coming back to how we think about investing, for the team I'm currently running, we talk a lot, I mentioned about unit economics and market inflections. One thing I hear a lot from people is to say, “Well, I can’t get customers to agree to X or Y because the industry doesn’t work that way.”
(00:16:37):
It's like, well, if the industry really wants what you have, they'll do things differently. And you start to see that. And so getting to work with companies to say, “Okay, I know the industry doesnt work that way today.”." People might not buy or make long term offtake agreements, or might not pay for this or that, but if you push, if you ask, if they really want what you have, they will.
(00:16:57):
So, working with teams to help figure out what the right kind of asks are and pushing those through is a lot of fun. I get lots of decks from people and I get asked a lot of times to give candid feedback, which I'm very pleased to do because I think a lot of people struggle to tell their story. And I’m not going to pretend to be, I'm an engineer, I'm not going to pretend to be the best storyteller in the world, but I have learned a lot about how to tell stories, and I do think one thing people in the climate space need to continue to get better and better at, is storytelling in a productive way. There's lots of inspirational stories, but we need to somehow channel that into something that's much more commercial and think about how we do that. That's stuff I really enjoy to do.
Jason Jacobs (00:17:39):
When did you join Temasek? What were you inheriting in terms of the Sustainable Living Group? What did it look like at that time, and what was your charter coming in?
Jeff Johnson (00:17:49):
Well, I joined Temasek about coming up on two and a half years ago. It's interesting. I had been sort of running this advisory business and I got involved in lots of different things, and I had the opportunity to work with some teams to co-found some companies. I had the opportunities to work with different teams to turn companies around. I had a chance to do lots of things, but as the tide came back in on climate, always in my head was is there a place that the experience, I have I can put to work in a broad sense, to help do my part to scale this industry, to help companies that deserve the right to grow to do that.
(00:18:23):
And what I saw when I first engaged with Temasek was just a depth of commitment. Our CEO talks a lot about, "We are here to actually decarbonize the world and not the portfolio.” And the spirit of that is very much you don't fix things by selling off your hard assets. You actually have to do the work to futureproof them. That level of depth and commitment from CEO and Board, I think, was what gave me the interest and confidence to think that you've got a firm that is working at scale and really thinking about, again, solving problems in the way they needed to be solved. That was what really got me interested.
Jason Jacobs (00:18:58):
Before we talk about what the group looked like at the time, and what your charter was coming in, I just want to probe on something you just mentioned, which is that mindset from the CEO, where did that come from? How did that come to be? I mean, it's what we need from more companies and there's a real absence of it, although it's slowly changing, but yeah, why?
Jeff Johnson (00:19:16):
The organization, we're a long term capital vehicle. What's really different in a lot of ways about Temasek is, it's not a fund, it's a permanent capital vehicle. We're really chartered to think about the long term. If you take a step back and really think about the long-term implications on business of the impacts of climate change, it's significant. And so, as a long-term steward of capital, if you allow yourself to think that way, it becomes really an imperative that this is an issue you have to proactively manage and deal with. And so, if you start there, if you start with kind of how we think about the capital that we are stewards of, this becomes an issue that you really do need to consider. And then the question is, "Okay, if this is important, then how do you put the various pieces in place to make sure that you can do it well?"
(00:20:12):
And that's where we've taken a very much of a portfolio approach, from our investment side, to think about how we do this and how do we want to think about exposure to earlierstage businesses and growth-stage businesses and public markets, and how do we think about working with different partners, et cetera, et cetera. I mean we also, like many other investment firms, think about how we embed this into everything that we do from our investment perspective. So, we obviously have done a lot of work to embed these considerations through the whole investment process, have put a carbon price on all of our deals, et cetera. So how do you make this part of how you think on a day-to-day basis, which is very much what we're doing, but then how do we proactively think about making great investments that we think can primarily meet return objectives, which is the first priority, but do it in a way that works on solving this problem, that if we can get right, we do believe there's the opportunity to earn great returns.
(00:21:08):
I think the hard part about the job is to really think about where can you end up finding the appropriate returns. This is a space where if you go in too early, if you end up in areas that don't really have unit economics that are ready to go and don't really have an industrial customer base or partner base that's really ready to scale, things can languish for a long time. And things languishing for a long time really does a number on your returns. So I think you have to be really disciplined to figure out where to go and why.
Jason Jacobs (00:21:40):
So what were you brought in to do and what was the pitch for you to join?
Jeff Johnson (00:21:44):
I came in at a time when the firm was really staffing up its team and capabilities to do this type of work. When I came in, we had lots of teams doing lots of things and lots of activity happening across the firm, and we were setting up new platforms, I mentioned some of those earlier.
(00:22:04):
The first part of getting in was just kind of getting your arms around what's going on and trying to understand what teams are doing, and have the opportunity to listen, learn and meet people in a relatively large firm like Temasek. I mean, really spending time to get to know your colleagues, to understand what people are trying to do and accomplish and understand how the place works. That was phase one. After that, it really became about, okay, how do we make sure that we're as organized and aligned as we can be across these different teams and platforms and solutions. And how do we then figure out what we want to build here, especially in the US, which is where I am, what business do we want to build and how do we start to put the right people around that?
(00:22:46):
So I mean, the first deal we got done, I think I was sort of borrowing people from different parts of the firm, just finding a way to find great opportunities and get them done. And then as we've shown that we've started to be able to put a dedicated team together and we're starting to continue to align different parts of the firm behind a set of themes and activities that we want to go invest in. So I can't say that when I joined it was, "Well here's the mandate, go."
(00:23:13):
It's a little bit more like you have networks, knowledge, and capabilities that we don't have enough of in the firm. Come in, figure it out, and then propose something, which I actually think is the strength of how Temasek works. You've got a really smart set of folks who come together and hash out what is the right way to do this. And it's an action orientated culture, and so the idea is to not sit around and see what comes or happens, but to go proactively figure out what you think ought to be done, and then work to make sure people understand why you want to do that and are supportive of that and go. So when I joined, that was very much what the job was. It was to come and figure out what we were doing, figure out what we weren't doing, figure out how to align everyone around what we thought makes sense, and then make a proposal and push it forward.
Jason Jacobs (00:24:03):
And what's the CliffsNotes version of what you've done, learned, and achieved over the last two and a half years? And then, similarly, as you look forward, it's with the understanding that nothing's set in stone and it's an evolving world, an evolving firm. You're getting evolving learnings, et cetera, what you see in the future in terms of the short, medium, and long-term for your efforts within the firm?
Jeff Johnson (00:24:22):
The way we started to think about what we wanted to do was to say, starting with where do we think we can have impact? Where do we think there's opportunities to deliver real decarbonization? So we started out by mapping out all these decarbonization pathways, what were all the ways we were going to possibly get there, where do we think there's the most impact to have? And then starting from that, where can we identify the opportunity to earn the right returns? And so one thing we did early on as a team is said, "Let's not go down the path of saying let's look for opportunities where we think we can make money and then can we justify enough impact to make it work?" That wasn't the approach. It was to say where do we think we can go have big impact, and then can we find the returns there or not?
(00:25:07):
And I think when you kind of start with that framing, you end up in a potentially different solution set than you would if you just start with, where do we think we can make the most money? I think in the end, we're going to only invest in things where we have conviction we can achieve the appropriate risk adjusted returns, but that starting point matters. So one example that we spent some time on was methane. So you think about methane, it's one of the highest leverage areas we have in terms of delivering immediate GHG kind of impact. So (we) spent some time looking at different opportunities in that space, couldn't find anything yet that is going to get us what we're looking for from a risk-return perspective. But again, that's an example of, but we spent time on it because of what we thought the impact could really look like.
(00:25:53):
We spent a lot of time on the energy storage and grid resilience space, for example. Looked at what are the things that are going to prevent the continued rollout of renewables, and energy storage is clearly a big part of that. And so we started to think about, okay, where can we invest in companies around that theme and really look to scale up solutions? So we've done a number of things there, but that's kind of the philosophy. It's been where can we find impact and then where do we find investible sectors, sub-sectors, and ultimately companies within that, and go.
Jason Jacobs (00:26:26):
What do you look for from a risk return perspective? And similarly, what you look for as it relates to impact and how do you measure?
Jeff Johnson (00:26:34):
We segment the world into fairly finer grained views. So whether it's a growth investment or a more mature private investment or whether it's public investment, those all have of different return thresholds. I mean, I would say that in general we're an equity investor, so we look for equity returns. We're unlikely to do project finance, asset finance, low teens is something that generally doesn't work for us. But you asked earlier about short, medium, and long term, what are we trying to go towards? I think that we really want to be able to do it at Temasek, and what we're really working hard to achieve is significantly scaling our investments in this wider, we call it, sustainable living space. The short-term goal is making sure that we do that well. And so, I think we've been continuing to get ourselves better organized internally to be able to do that.
(00:27:23):
We've been working hard to communicate what it is that we've been working on ,and all these different platforms and partnerships that we've set up, and bringing clarity to that so that everybody out there knows what we're doing, how we're doing it and why we're doing it. And then if we think about medium to long-term, I believe we have the opportunity to really help show that this is a space and this is an investment area that people can really do well and succeed in. So far, the jury's been out on that. If we look over the last 15 years, it's been challenging to say the least, but if I look out in the next five, ten years, there's a lot of reasons for optimism. I get excited about great companies being started. We're bringing more and more experienced entrepreneurs into this space who can really help scale up good businesses.
(00:28:10):
We're bringing lots of younger folks in who are excited to build companies and build solutions, and ultimately you've also got the wider world and legacy companies out there, incumbents, who look and say business as usual isn't going to work anymore. Now how fast people are willing and wanting to change, and what their motivation is and whether their shareholders are ultimately supportive of that. I mean it's all really difficult. We always have to temperate the enthusiasm a little bit with the reality that this isn't going to be overnight or this isn't going to be, frankly, as fast as we probably need it to be. As a steward of capital, I think about that a lot. I think a lot about how do we make sure we don't misallocate risk and capital to things at the wrong stage at the wrong time. There's a lot of focus, Jason, right now about people are talking about how do we think about is there capital to scale up businesses? How do we finance first of a kind facilities, how do we do this? How do we do that?
(00:29:07):
And it's the right set of questions. There are some out there who argue that there's not enough capital and we need more, and it's not completely wrong, but when there's money to be made, capital finds its way to those ideas. And I think the industry, and we all, if we can just focus on trying to help companies be better in terms of ready to scale, do they have the right customer relationships in place? Do they have the right EPC contracts or other people who are going to help them do that? I think that as a later stage growth investor, I can't lean into a business and take a whole host of binary risk and not get appropriately compensated for that. So I think the challenges, as an industry, is to continue to work hard to figure out how do we put the pieces together to make good ideas, great companies.
(00:29:59):
And that's a big difference, right? There's a lot of good ideas and even interesting technologies, it doesn't mean they're going to be a good company or a really scalable company. So I think getting really good at that is important, and just making sure that we're all rowing the boat together, in terms of trying to address some of these scaling issues as early as possible, will go a long way to help addressing some of these gaps.
(00:30:20):
But asking investors to take, I had someone recently come and basically say,We don't want to raise money at the parent company level because we don't want to take the dilution, so we're going to raise money at a manufacturing company level, and we'll send cash back. It'll be great, but it's going to earn about 15% return." My question was, "If everything doesn't work, that manufacturing co. still goes under and still has binary risk." And so as a later stage investor, you've essentially kept the upside, I still have all of the downside. It doesn't really work, it doesn't really make sense. So I do think we're kind of, as an industry, fighting through some of these issues and challenges, and I do think it's important that we all work together to figure out what makes sense.
Yin Lu (00:31:02):
Hey everyone, I'm Yin, a partner at MCJ Collective, here 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 have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view.
(00:31:22):
What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and 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 the climate space 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 MCJCollective.com and click on the members tab at the top. Thanks, and enjoy the rest of the show.
Jason Jacobs (00:32:02):
And how much of what you do is thesis-driven versus opportunistic, and what does that process look like typically, if there is such a thing, in terms of getting something through to actually deploying capital?
Jeff Johnson (00:32:14):
Anyone who says they're not opportunistic is kidding themselves, sometimes, you know, things come. I think the idea is, though, we do have a point of view fundamentally on what we're looking for. I think that is critical. So we kind of put everything through this lens of we really understand unit economics, really understand whether the market's inflecting and what it's going to take to get there. So over any sector, that's a core piece of what we're looking at and looking for. After that, we've said there's a handful of industries that we think are ready to start to see that scaling, so we talked about energy storage, and grid resilience is one area. It's spending a lot of time around mobility lately, spending time around sustainable and critical materials. So we see some areas where we think those characteristics play, and have been very proactively looking and working on things given the passage of the IRA, where there are places given that policies in place that make sense to build off, whether it's certain select areas of bringing manufacturing back to the US, for example.
(00:33:17):
So we think about that and then make sure we build understanding, knowledge, expertise, and invest around that. But I always very much like to be challenged, and some of those opportunistic inbound things (can) reorientate your views on what makes sense, what industries are really ready to scale. And so I think if you're not trying to be open to those things, revise our points of view as data allows for it, I think that there are areas I'd love to see work that I don't think are really ready to scale yet. That being said, I'm very happy to hear from people and listen and learn to understand what and when might be time.
Jason Jacobs (00:33:55):
How many investments have gotten across the line during your time so far, and what's the breakdown with direct versus fund, and also how do you think about concentration versus diversification and pacing in general? And how has that changed relative to say 12 or 24 months ago? I don't know why I asked so many questions at once.
Jeff Johnson (00:34:14):
It's all good. Keep going, Jason, keep going.
(00:34:17):
Across the firm, we've made a lot of investments in the space. My team has made a good number as well. I mean, primarily looking to do direct investments, but we've made fund investments, we've mentioned some of the platforms that we've created. We continue what we think of as part of that with BlackRock and Decarb Partners and what we did with HSBC and Pentagreen, and we were one of their early investors working with Brookfield on the Global Transition Fund, and that's been a fantastic partnership. So we've got a number of those types of relationships, and I think that if you look at a firm like ours, the quantum of capital that we're working with scaled relationships with large partners is one way to put a reasonable amount of capital to work efficiently. We have great partnerships with those different firms and work closely where we can, and that's been great.
(00:35:09):
We also identify where there are differentiated specialty teams to work with and funds, and we'll do that very selectively, but most of what we're doing is looking at making direct investments and we're extraordinarily busy on that. But I think increasingly looking to find a little bit later-stage business to do, I think for us being able to put larger quantums of capital to work and really deliver scale matters. That's something we're going to be spending more and more time on. We don't get too much into exact numbers and how we think about portfolio construction in detail. I will say that we've got to be diversified, but you also have to... We work really hard to really understand the areas we're investing in, do the work to make sure that we really have conviction.
(00:35:58):
I always laugh when I first joined the firm because I've worked with a lot of different organizations and investors, et cetera. I'm used to a question list being a certain length, and I've gotten used to the fact that here at Temasek, our question list will usually be about twice as long. And I think it just speaks to the mindset of we want to make sure we really understand things, we want to make sure we really are clear about what we're getting into. And then I think as an investment team, we spend a lot of time making sure that we are asking the right questions. How do we really make sure we know what we need to know and prioritize learning the things we need to learn in order for us to make good decisions?
Jason Jacobs (00:36:37):
You mentioned earlier that this is a permanent pool of capital and not a typical closed-end fund. Practically speaking, what are the implications of that in terms of, really any facet of what you do, in terms of how long you seek to hold, in terms of what types of risk you might take on, or anything else I'm missing? What's different about that?
Jeff Johnson (00:36:56):
What's different, in the end, both a lot and not a lot, right? So when we underwrite a deal, you have to be really disciplined to not just say, "Oh, because we're this long-term capital vehicle, we can just assume we can hold things for a long time." Or you can't allow it to be an excuse for poor performance. If you let it happen, that mindset could creep in. And so we really work hard to make sure you're underwriting to appropriate hold periods, really thinking about what exits can look like. But when you take a step back and think about how you design an investment thesis, how you think about what areas are interesting, we tend to avoid the momentum plays that are out there.
(00:37:40):
Something that's building up really fast and you start to see movement really quickly, if we take this long-term asset owner view it, say, does this really make sense? When we had a lot of companies that were stacking themselves, I understand why. I understand the motivations, I understand what teams were doing, and I don't begrudge them at all. I think they were going to where capital was, but for us, we were trying to understand are interests really aligned, are these companies really set up long-term? Is this really a good place for us to be, and set that out.
(00:38:10):
I think you see things like that, where there's a lot of short-term momentum, and I think that we tend to sit on our hands with things like that. If you're motivated, in order to put money out fast and show returns fast in order to get your carry check, that's going to motivate certain kinds of behaviors, which I understand. People are doing exactly what they're being incentivized to do, but I do think that's where, with the way our capital works, we're not incentivized to do that and I think it allows us to make better long-term decisions.
Jason Jacobs (00:38:39):
I mean, I know that if you even take a typical close-end fund, whether it's venture or private equity, that it's pretty hard in the early years to know how you're doing, or for externally, to be judged even in the period where you're out, three or four years in and raising your next vehicle. I mean the J-Curve, I'm learning takes longer than that. And so I guess my question is how do you know how you're doing and measure performance internally? How are you measured with your activities, and how might that be similar or different than it was a closed-end vehicle?
Jeff Johnson (00:39:11):
Yeah, I mean look, at the end of the day, your job is to produce returns. The big question along the way, until you have cash back in, sometimes it's hard to know how you're doing. I mean the beauty of the public markets, if you will, is I guess at the end of every trading session you get a bit of a scorecard. You kind of know where you stand. In the private markets, you don't have that. And look, you can also perhaps get overly excited about markups along the way. Some teams are really going to try to optimize for valuation at every single capital raise and try and show that, but sometimes that doesn't really work out. We really try to find how do you make sure you build syndicates with the right partners at fair prices that can continue to help companies scale and grow, and leave room for ultimately what needs to happen in the end.
(00:39:56):
So the way we look to, along the way, understand where companies are at, is being involved, understanding are they meeting their objectives that they've set along the way? Are they hitting key strategic targets? That's the best way to know where things are at, and making sure you have clarity on what's actually going on is really important. There's lots of examples where you can think things are great, not really understand what's happening, and then one day wake up and you've got problems. So how do you make sure you're really engaged with teams and working with your investor partners, et cetera, to really understand what's happening at companies and making sure you can be supportive of them along the way. I mean obviously you have markups, that's great, but in the end until the lining comes back, it's hard to know. So try less to look at that and more to look at the underlying performance.
Jason Jacobs (00:40:46):
You mentioned looking for the right partners versus just optimizing for valuation. And you might've been saying that from a founder perspective, but from your perspective as Temasek, when you seek to evaluate potential investments, how do you play in the sandbox? Do you compete? Do you collaborate? Do you try to lead? Are you very ownership-focused? And when you think about the optimal syndicates, does it vary widely on a case by case, or do you have biases or criteria that you'd like to see in terms of who's to your left and to your right?
Jeff Johnson (00:41:14):
My starting point is always what's best for the company. What is it they really need? And we have a lot of flexibility in terms of what is the right kind of outcome for us. We can lead, we don't have to lead. I think for us, because of the nature of the firm, there's not an ego play here. I think that sometimes, in certain situations, kind of drive people and take people over, and that's not how we are. We're an extraordinarily collaborative firm. Partnerships are a big part of how we think about doing things. We really like to work with others. And so I think, ideally, for us being collaborative, frankly, inviting more people to the party is something that we tend to think of as a good thing, and we kind of act, behave, and work accordingly.
Jason Jacobs (00:41:55):
I can't believe we're over 50 minutes in, and I haven't asked you this yet, but, I mean, when you say growth, is there a certain revenue run rate? Is there a certain check size or ownership target that you seek to hit, just from a core criteria so that founders listening can screen in or screen out on how to think about you for their rounds? What's a fit?
Jeff Johnson (00:42:14):
We have different parts of the platform that do different things, and so I think that's where that is sometimes a harder question to answer, because we have our early stage deep tech emerging technologies team that will take earlier-stage risk. We have an innovation team that does some things that are taking a little bit more venture risk. We have our Decarb Partners, JV, we have our GenZero platform, so we have lots of different pieces of the puzzle. I think, broadly speaking, and then obviously the team that I'm running, like everyone, we're looking for the kinds of opportunities that can really scale into the massive game-changing companies of tomorrow.
(00:42:52):
If you really look critically, there are some companies who are going to be great companies and earn really good returns for their venture investors, but that the likely outcome is they get bought by a strategic, they're going to end up with a three, four, $500 million exit potentially. Those generally, across our platforms, probably aren't the right kind of businesses for us. I think that's an important piece of the innovation ecosystem, an important piece of the market for people to be funding, but we're really looking for, really across the board, what can be category defining platform type businesses that can really, if there's not a critical path for something to being worth at least 10 billion, ideally a lot more, probably going to be hard for us to get involved.
Jason Jacobs (00:43:35):
You haven't said this explicitly, but my sense just from this discussion and from other discussions and data points I've had, is that maybe it's less about quantity and really about putting some real wood behind any investment you get involved with, where you're putting bigger checks in, getting more involved, but maybe doing fewer investments than some other firms. Is that a fair assessment?
Jeff Johnson (00:43:56):
Probably fair. People ask, revenue and this and that. I mean, we have made a number of investments into things as they were getting started. We worked with the team at H2 Green Steel, for example, to help put that together. I mean that's just getting started, but you had offtake, you had credible technology, you had a good team. And so we were able to get, as a firm, conviction to do that. We just co-led an investment into Ascend Elements, very clear relationships for offtake, really proven technology. We can get comfortable with that. It's really about, can we look and see the substance that's there that gives us conviction that the risk-return makes sense. I think that's where it's a lot different if you've got something that says, "We've kind of tested the technology, but we have to finish our pilot and we've got some interesting MOUs with customers and we're hoping to get those closed." That's a really, much more challenging situation to make a meaningful commitment to.
(00:44:51):
And those are the kinds of things we talked about earlier. What do we want to see companies be able to do? It's to be really laser focused and disciplined from stage to stage to stage on de-risking the technology, but also de-risking kind of customer adoption, market, and doing those in lockstep together to make sure you've got something that's finance-able along the way. I mean, obviously revenue is great, EBITDA's even better, but if we can get conviction that you've got a great technology, we're not taking meaningful technology risk and you've got customers that we know are really going to be there, that's interesting.
Jason Jacobs (00:45:25):
From a market standpoint, do these tend to be competitive rounds, or are you tending to find and engage with them out of cycle? And do you have a preference?
Jeff Johnson (00:45:34):
Again, it comes back to what's best for the company and how do we be supportive of that. For good companies, there's always going to be some level of competition, but part of it is different firms have different things they look for or they've told their investors they're going to do or not do. And so part of it is different firms perhaps, putting in term sheets that optimize for different things. And so, whether it's higher valuation but less capital and not fully fund the opportunity and kick fundraising down the road. We've seen some things like that. We tend to like to come in and say, "If we're going to do something that's going to scale, let's be really clear that we don't want to have lingering follow-on financing risk."
(00:46:14):
If I go back to the Clean Tech 1.0 situation, one thing that really caused a lot of problems to people is you raised enough money to move some things forward, but not enough money to hit a really big meaningful milestone. And so then you're stranded halfway through a project with not enough quite yet to show that you've hit something commercially, or from a market adoption perspective, and you're trying to pass the hat around at a really difficult time. Those are things we don't really want to get involved in. We want to make sure that when we get involved in, especially these larger-scale opportunities, that you're taking that type of risk off the table.
Jason Jacobs (00:46:51):
We talked a little earlier about FOAK and the role of debt financing. How do you think about Temasek's role as it relates to the debt side? Are you just a referrer and a collaborator, or is there ever a more formal role for you to play there as an allocator? And similarly, since I asked questions in twos, for some of these rounds where it really should be debt, but for whatever reason the debt isn't available, what do you think about using equity for building out those early plants?
Jeff Johnson (00:47:16):
Well, I love how FOAK has now become a term, that's like a new thing. The way you asked that, things that should be debt that aren't. I would push on that a little bit to say that if the conditions are in place for debt to be appropriate, that's out there, that capital would love to find ways to put money to work. It's just, again, when you know what the criteria are to underwrite that, when you know what it is that they're looking for, you can try to start to optimize for that. And that's really important. Relatively early-stage companies could still get equipment financing if there's a known residual value on it, but if you're building a company using all custom stuff, you can't get that. So I think a lot of this is to say, understand where you are, understand the constraints of those potential sources of capital. Almost make that if you can, as a design constraint to make it easier to finance the business.
(00:48:06):
A lot of first-of-a-kind facilities still have binary risk in them. And if you have that level of binary risk in general, the most appropriate financial instrument to put at that is equity. That just kind of is what it is. Now, is there ways to reduce the amount of equity you need and impact dilution and other things? Absolutely. That's what some of the good work coming from the DOE, for example, we talked about equipment financing. There are ways to help reduce that burden, but one of the things I have to spend a lot of time thinking about and making sure we're not doing is mis-pricing risk. And if you're taking binary risk on a first-of-a-kind facility, that's not debt, that's not the role of that type of capital. You have to mature something to get there. So we've demonstrated our interest in being able to invest equity into those kinds of opportunities, and continue to have that interest.
Jason Jacobs (00:49:02):
So for some of these areas where it requires tons and tons of capital with lots of bench level science risk, and far before, there's things like scaling revenues and unit economics. And I'll just give you one example, fusion. How do you think about those areas relative to your standard lens for evaluation?
Jeff Johnson (00:49:20):
These are interesting questions and issues. How do you really scale up fusion? We have some interest in some companies in that space. We're excited about it, but it's going to be hard. It's going to take collaboration of many stakeholders and who, how do people want to get involved and work and scale those businesses? I mean, if you look at other things, it's an interesting question. You can look at fusion, you can look at something like direct air capture. If you look at the IPCC reports, we all know that carbon removal has to be a part of the solution and we need that. But how far can really expensive removals go? Are we yet to the point where we have solutions that are going to be, at scale, cheap enough to be part of the real answer, versus very small niche things while we're still out there looking for the really scalable solution that is the real answer.
(00:50:11):
So the question for a lot of these businesses, in some ways, is are we still in R and D mode, and do we need to really be funding fundamental research and R and D, or are we really ready to start to scale? And if we are, who are the different stakeholders that can take, and have the right risk and interest in what that looks like, to really get there? And frankly, are there things along the way that you can do that can help be sources of revenue and opportunities that can help de-risk this? I mean, if I've learned anything in my time at Temasek, given the breadth of what we do and all the different teams, it's kind of bringing a much greater lens to risk and thinking about risk. Thinking about what parts of our platform should take what risk, thinking about what risk should we really not be taking. And I think the spirit of the question there gets back to exactly that, is who should take what risk, and where's the capital for that going to come from?
Jason Jacobs (00:51:07):
Relatedly, it seems from my seat, the amount of companies that grow to the point where they clear the bar to be ready for the big capital injection from somebody like a Temasek is still relatively few and far between in climate tech. I guess one, is that what you're seeing as well? Or what are you seeing? And two, if you do look at the farm system, if you will, what's missing or what could we do either to move companies through faster or to help build a bridge that more of them graduate quicker?
Jeff Johnson (00:51:37):
We are at a time where the next handful of years, there's going to be a phenomenal set of companies really reaching that real, scale-up growth phase and stage. And so I think about going back to 2014, 15, 16, when basically the only money for the space were some corporates and a handful of family offices. That was the bulk of the investment environment in that timeframe. And you had a need to catalyze the next phase of the industry. I give the Breakthrough Energy Ventures team a lot of credit for being an organization that kind of put a spotlight on this, said they were going to take some real risk in people, in companies and teams, and they put together a great organization and really helped re-inspire the space. And I think there's been a lot of great follow-on effects to that. And I think you've got a lot of people around the industry now, that are working to help support a lot of these companies.
(00:52:33):
And so, if I think about when that started happening and all of the businesses that have started to come out from that work, we're hitting scale for some of those as we speak. We're seeing lots of things, we're seeing lots of companies. We've said it a couple of times already, the thing that sometimes we see is that the business model approach, the way to think about actually building the business end, is where we tend to see some shortcomings more than where the technologies are at. And so if I think there were one thing we as an industry can do, is to continue to support these companies earlier on, and I wish I had more time to do this. It's one thing I love to do. I unfortunately don't have as much time to do it as I would like, but working with some of these earlier-stage companies to really think about what's the right business model.
(00:53:20):
I mean, I think everybody initially thinks, well, I just have to vertically integrate everything and that's what success looks like. And in a lot of areas that's not the case. So really thinking about what value do you uniquely create, what business do you need to build because others either don't or can't. And just being really rigorous and disciplined about that, I think, would go a really long way. Again, how do you get the right partners involved? How do you get customers to actually commit to things? I mean, it's really hard, but those are the things that we need to do. And as companies figure that out, and as I'm seeing more and more of companies doing that, it becomes a really attractive space for us, and firms like us, that can really help bring larger amounts of capital to companies and really help them scale up to global success.
Jason Jacobs (00:54:06):
In terms of what would be valuable for you, Jeff, or anyone listening that is inspired by your work and where you sit in the ecosystem, what kinds of people might you want to hear from, if anyone? How can we be helpful to you?
Jeff Johnson (00:54:20):
Look, I know there's a fantastic set of listeners to this, and I think you've done an awesome job of highlighting the space and challenging the opportunities of that. You kind of went on your own journey here and have listened and learned, and I've had the privilege of doing this for a long time and seen a lot of things not go well. Early on, a lot of ambition met with cold hard reality, and I think we're now at a time where the future is going to be very different than it was in the past for this space. I think we've got a lot of motivated people. I think we've kind of figured out how to work our way through a lot of these early challenges. I think we figured out how to de-risk technologies more efficiently. We figured out how to work with wider sets of stakeholders.
(00:55:03):
So I think that's all great and interesting, and I'm very keen to talk to and share what I've learned and listen and learn from others, just in terms of how we really are going to disrupt and change this world we live in to have something that, really long-term, is sustainable. And that doesn't mean that we don't have solutions and technology and live in a vibrant forward-looking society. I think that's all true, but how do we do that in a way that recognizes the planetary boundaries and all the things we have to live with? But I don't think that necessarily has to mean moving backwards. How do we really innovate like heck to do great things? And I think anybody who's working on that, I'd love to talk to.
Jason Jacobs (00:55:40):
I come across a lot of people who, I'll just give you some examples. They are a longtime generalist partner, or longtime partner at a generalist PE shop, or a longtime partner at a generalist venture firm, or they are an institutional, they're a big endowment, or pension fund that's been allocating into generalist tech for a long time. And when they look at climate, they have a lot of anxiety and fear because they see the symptoms, they see the groundswell of activism and young people, and pressure on employers from all sides and cost curves coming down and dollars flowing into the space and flood of talent. And they say, "Well, those are all good signs."
(00:56:24):
It really feels like if we don't do something here, we're going to miss the boat. But at the same time, where's the DPI, who buys these companies, at what multiples? Like, gosh, there seems like the risk is mismatched. These things are so capital intensive. Isn't this early equity just going to get washed out, et cetera, et cetera, et cetera. So as someone that's been doing this for a long time, who's putting real capital to work in this space, what would you say to those people? And there's probably a lot of them that are listening right now.
Jeff Johnson (00:56:48):
I get it. Everything you said is true, and yet we still have a huge number of people paying attention. Everybody sort of, if you just looked at the past, you wouldn't do this because it's been really hard. There have been easier ways to make money. If we look forward, and I think that's always really hard. I mean, everybody wants to look backwards to try to understand what the world's going to look like. And we're dealing with an industry, where when we look forward, we know that the status quo leads us to a not very good place. We know that we're trying to iterate and find solutions, and the will and the conviction to do that is continuing to get stronger. And so what I would say to those folks who are worried about it is go talk to people who have been doing this for a long time.
(00:57:33):
I mean, I know I talked to some allocators and folks who say, "Well, it's really hard because the folks who've been doing this a long time, their returns are only so-so and this and that." Again, if we look forward, those are the people who actually really understand the space, who really understand what works and what doesn't. And that learning, if we look forward, is going to be hugely valuable.
(00:57:55):
And so this space is, you got to understand a whole host of complexity. You have to understand how bigger markets work. We're trying to, again, going back to the very beginning of our conversation, we're talking about fundamentally shifting the foundation of our economy. When you get that right, the opportunity to build long-term, durable, humongous businesses is absolutely there, but it is going to take some time and it's going to be done by people, frankly, who are in it, who have learned from that. So I would say go seek out the people who've been around this for a while and really listen to what they have to say. There's a lot of great venture funds out there of people who have been doing this and who have been a part of some of these spectacular failures, and have learned a tremendous amount from that. And I think that perspective is extraordinarily valuable and worth doing the extra work in the underwrite to ultimately get there.
Jason Jacobs (00:58:51):
Well, I thought that was my last question, but your answer leads me to one other question I want to sneak in, which is something that I wrestle with, which is on the one hand, I totally agree with you that there's no substitute for the deep institutional knowledge and hard lessons and pattern recognition and subject matter expertise and et cetera, et cetera, that comes with experience. There's no substitute for experience. At the same time, with experience can come PTSD, and to a certain degree, you need some beginner mind and some kind of ignorant optimism, otherwise you wouldn't be stupid enough to even try. I mean, Google's an example, right? Another search engine, come on. Or Airbnb like, what strangers are going to let people sleep in their house, or things like that. So how do you think about that, and in some ways do you worry that the institution, that the experience can actually make you more risk averse and actually make you your own worst enemy when it comes to picking winners?
Jeff Johnson (00:59:44):
It's a good question. I mean, I think that in the end, ultimately these solutions work in scale by embedding themselves in a much wider and deeper and frankly somewhat risk averse ecosystem. I think that that understanding is extraordinarily important and valuable. And then how you compliment that with team members and other folks who bring some of what you just mentioned, Jason, obviously is super important. And I think part of that is looking at the ultimate decision makers and people, and understanding who they are as investors and as human beings. I mean, I think about myself. I'm a massively intellectually curious person. I seek out differing opinions from mine to listen and to learn. And I think a big part of it is how do you make sure you're finding people with that type of approach and mindset? I mean, the person who thinks they are right on everything and know everything, that's a pretty dangerous person because there's a lot to learn and a lot to go wrong.
(01:00:40):
I will say though, that this industry, given the fact this isn't like software, it's very different. And so I think that making sure that you really understand the world in which you're innovating is really important. I remember when we were at Better Place, I mean again, that could be a whole show, but we had mostly software people that were trying to tell electricity, utilities and car companies, how the world worked. And you know what? Didn't work in the end.
(01:01:06):
I do think there's a level of making sure you have some level of knowledge and respect for the industry you're trying to disrupt. I remember when I started learning about how you thought about monetizing batteries for energy storage and the business model around that. In a day I thought I was an expert, in a month I realized I wasn't, and then in six months I was really in the depths of trying to figure it out, and then a year or two later I actually started to sort of understand. That can happen a lot, and these are much more complex and challenging industries. That's the most important piece of that. Again, there's lots of good ideas, there's lots of interesting technologies, but that has to translate into a really good company. So making sure you don't kill off where there's good ideas too early, but ultimately making sure you're figuring out how to invest and scale companies and industries that are hard to scale in.
Jason Jacobs (01:01:56):
Well, I love that as a place to end on. Is there anything I didn't ask that you wish I did or any parting words For listeners?
Jeff Johnson (01:02:03):
Again, pleasure to be here. Thanks for inviting me on and again, everybody listening, just really for those of you working on these problems, trust me, I know how hard it is and I really appreciate all the work, and hope to get to work with many of you in the future.
Jason Jacobs (01:02:14):
This was awesome, Jeff. Thanks so much.
Jeff Johnson (01:02:16):
Thanks, Jason.
Jason Jacobs (01:02:17):
Thanks again for joining us on My Climate Journey podcast.
Cody Simms (01:02:21):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (01:02:31):
If you'd like to learn more about MCJ Collective, visit us at mcjcollective.com, and if you have a guest suggestion, let us know that via Twitter @mcjpod.
Yin Lu (01:02:44):
For weekly climate op-eds, jobs, community events, and investment announcements from our MCJ Venture Funds, be sure to subscribe to our newsletter on our website.
Cody Simms (01:02:53):
Thanks, and see you next episode.
