Winning the Climate War with Tom Steyer

Nov 4

By now, you’ve likely noticed our refreshed look. We’re evolving the show to focus on the inevitable impacts of climate change and the groundbreaking solutions shaping our future.

To kick off this next chapter our first guest on Inevitable is Tom Steyer, Co-executive Chair at Galvanized Climate Solutions, a multi-strategy investment firm focused exclusively on the climate transition. A little over a year ago, Galvanize announced the final close of its Innovation + Expansion Fund at over $1 billion, one of the largest climate venture funds ever raised. Tom is also the recent author of the New York Times bestselling book, "Cheaper, Faster, Better: How We'll Win the Climate War," and he wrote the Forward to Project Drawdown.

In 2020, Tom was a Democratic presidential candidate with a climate-focused policy agenda, and he participated that year on the primary debate stage alongside now President Joe Biden and now VP Kamala Harris, among many other notable Democratic party leaders. He's the founder of NextGen America, the largest youth voter organization in the USA, which he created in 2013. But Tom hasn't always been focused on the energy transition and climate change. In 1986, he founded Farallon Capital Management, a multi-strategy hedge fund that he ran for over 25 years and grew to hundreds of employees and $20 billion in assets under management. His story of having incredible success in one field and then feeling the inevitable pull to work on the biggest problem of our time is exactly the type of pathway that we plan to explore on this show.

*We recorded this episode live during Climate Week NYC, in front of a fantastic audience. We'd like to thank them for joining as well as the folks at ethic for lending their beautiful space and JP Morgan for helping to sponsor the event.

Episode recorded on Sept 24, 2024 (Published on Nov 4, 2024)

In this episode, we cover:

[4:55] Tom's book theme: "do the obvious thing"
[9:58] Tom's book theme: "the status quo will not go on forever"
[13:53] Energy is wealth and how we can collectively retire fossil energy with renewables
[17:06] Tom's decision to dedicate his career to climate and his early pathway
[21:34] NextGen and the org's origins
[23:32] Sharpening your bullshit detector
[25:03] What prompted Tom's 2020 presidential run
[26:05] The catalyst to Galvanize
[29:26] The firm's different focus areas and strategy
[34:45] Tom's "five plus one" approach to investing
[38:01] The model Tom would like O&G companies to take in the transition
[40:45] Thoughts on the "climate war"
[44:13] What happens when climate tech is no longer a category
[46:56] Tom's thoughts on permitting halting clean energy progress
[49:59] Rapid fire topics including China and India
[53:13] Hyperscalers and AI
[55:01] Tom's policy wish list
[59:29] His call to action for listeners

Cody Simms (00:00:00):
Hey, it's Cody. I want to take a minute before we get started to share a few things about this episode. First of all, we recorded this one live in New York during Climate Week NYC, in front of a fantastic audience, and I'd like to thank them for joining as well as thank the beautiful venue ethic and JP Morgan for helping to sponsor the event, all of which afforded an opportunity for dialogue and countless connections among the attendees. Secondly, you might've noticed that this episode went live in your player under a new podcast name INEVITABLE. This is the first episode of the show under this new name, one that we believe represents the spirit under which we are all building. Between the increase in extreme weather, wildfires, hurricanes, tornadoes, and flooding, climate change is inevitable. It's already here and it's going to continue to drive change in our lives in global markets, insurance and in our responses both to active events and the prevention of future calamities.
(00:01:08):
But at the same time, the energy transition, the rewriting of industries to be cleaner, more profitable and more resilient is also inevitable. On this show, I sit down with experts across sectors to explore the groundbreaking innovations and extraordinary people shaping this transformation. And who better to kick us off under this new masthead than today's guest, Tom Steyer, Co-executive Chair at Galvanized Climate Solutions, a multi-strategy investment firm focused exclusively on the climate transition. A little over a year ago, Galvanize announced the final close of its innovation plus expansion fund at over $1 billion, one of the largest climate venture funds ever raised. Tom is the recent author of the New York Times bestselling book, "Cheaper, Faster, Better: How We'll Win the Climate War," which everyone listening should read if you have not. He also wrote the Forward to Project Drawdown, which I believe is one of the most influential books ever written on climate solutions.
(00:02:20):
He was a 2020 Democratic presidential candidate with a climate focused policy agenda, and he participated that year on the primary debate stage alongside now President Joe Biden and now VP Kamala Harris among many other notable Democratic party leaders. He's the founder of NextGen America, the largest youth voter organization in the USA, which he created in 2013. But Tom hasn't always been focused on the energy transition and climate change. Way back in 1986, he founded Farallon Capital Management, a multi-strategy hedge fund that he ran for over 25 years and grew to hundreds of employees and $20 billion in assets under management by the time he left. So his story of having incredible success in one field and then feeling the inevitable pull to work on the biggest problem of our time is exactly the type of pathway that we plan to explore on this show. But before we start, climate change is inevitable. It's already here, but so are the solutions shaping our future. Join us every week to learn from experts and entrepreneurs about the transition of energy and industry.
(00:03:47):
Tom, welcome to the show. Thanks for coming.
Tom Steyer (00:03:59):
Thank you for having me.
Cody Simms (00:04:02):
So much to talk about. I want to start with your book. There were two big things that really stood out to me as I was reading the book that I think were going to come back through probably throughout this conversation because it feels like themes that relate to just about everything all of us are working on. One is the theme of do the obvious thing and the other is the theme of the status quo will not go on forever. I would love to hear you talk about each of these, maybe starting with the do the obvious thing theme. You basically say, one, you don't get credit for degree of difficulty. Two, one of the most important things in investing is to find surefire things that others overlook. You're not trying to hope and pray the thing you back might work. You're trying to find things you know are going to work, but others just don't see it. And in your perspective, the clean energy transition right now is the big obvious thing. Share more.
Tom Steyer (00:04:55):
It really is true that in investing every time you invest in something, whether it's a public security or a private investment, by definition, you have to be the most confident person in the world because you're paying the highest price. So every single time the question in investing is how strong are your hands? How much do you believe it? And in particular, if you think, and this is true, if you're doing venture, and this is true if you're buying a public security. If it goes down, does that mean you want to buy more? Does that mean you want to get out? So if you're really confident in something and you really believe in it, lower prices are an opportunity to add at better prices. If you're really not sure and prices go down, that implies someone else doesn't like it and that maybe you should defer to their judgment and get out.
(00:05:39):
So really what I'm talking about do the obvious thing is what I'm really saying is do the thing you deeply believe in because you know that whatever you're expecting the world to be like is not the way the world's going to be because the world changes in absolutely unpredictable ways all the time and always will. And so you have to have something where you really have conviction and something where you're going to go through almost certainly vicissitudes. It's not going to go that you buy it at the low point and it does nothing but go up that you're going to have to build things. And so you don't when diving or gymnastics, you may get it's a 7.0 with a degree of difficulty of 2.5. In investing, it's just returns. And so trying to do something really complicated means that there are a lot more things that can go wrong and a lot more things that have to go right.
Cody Simms (00:06:27):
And you go on in this theme in the book to talk about how the clean energy story maybe has less degree of difficulty than some of the stories we're hearing from the oil and gas industry. Two of which I think one is natural gas as a bridge fuel like replacing coal, and the other of which is carbon capture and enhanced oil recovery. Those stories relative to the clean energy story. Talk about why the clean energy store is more obvious.
Tom Steyer (00:06:53):
I just think this is about data and I think that really and being an investor is trying to understand the data and understand where it's going. And I think it really depends. It includes what you're looking at. And just to talk for a second about projections of the future. I think there is an expectation in the oil business that just so you guys know, I think we do 102 million barrels of oil a day in the world just to put that number in your head if it's not already there. And I think the expectation of people in the oil business is that in 2050 we'll be using somewhere between a hundred million barrels a day and 110 million barrels a day.
Cody Simms (00:07:29):
I can confirm I was in Houston last week and had a conversation and it was, we're going to keep drilling. The transition to us is not a transition away from oil. It was very clear.
Tom Steyer (00:07:39):
I think people in that industry feel that every new addition of clean energy, whether it be fuel or electricity, is an addition, not a replacement. But conversely the UN, so the people who are the central focus of predictions about climate would predict that 20 million barrels a day would be used in 2050. So somewhere between a hundred and 110 and 20 not close. And you have to ask behind those predictions, what else is going on in the world? Do I think that everything else being the same? Do I think that there would be a demand for at least 110 million barrels of oil a day in 2050? Sure, absolutely. We want to use more energy in 2050 than now. 100% probability in my mind. But if you look at the implications of continuing to use the same amount of fossil fuels and fossil fuels are roughly three quarters of the emissions.
(00:08:32):
The 42 gigatons of emissions, roughly three quarters of 'em come from fossil fuels. The idea that we could still be emitting at that level in 2050 and that other things wouldn't have happened that absolutely seem incredibly probable in terms of temperature, water temperature, sea rise, storms, floods, fires, all that stuff. That just isn't the science. Something would have to dramatically change in the science to believe that there wouldn't be other impacts of that. That would mean that doing that would seem unlikely. So when I think about it, all I'm saying is look, let's look at the data and my opinion is the more conversations we have the better. Because really we want an 'all of society' answer. It's not going to be Democrats doing this in the United States. It's not going to be part of the world doing this. It's not going to be young people doing this. Really, we all need to buy into it for our own reasons. And the book is called "Cheaper, Faster, Better" because the point is we have to produce stuff that's cheaper, faster, and better.
Cody Simms (00:09:29):
It reminds me of the Twitter meme if folks know it where you've got the guy on one end, he looks not very intelligent, and then there's a bell curve and there's someone at the top who's like trying really hard and like Rah. And then you have the guy on the other end of the bell curve who is zenned out. And the idea is the person who's not very smart and the person who's zenned out just kind of believe the simple thing. And the person trying really hard is trying the very complicated thing and it's just not working.
Tom Steyer (00:09:55):
It doesn't seem that complicated.
Cody Simms (00:09:58):
Theme two, the status quo will not go on it forever. You talked a little bit about this, but what I like to do is zoom out from a historical context. You have a great metaphor or a great story in your book about media companies and newspaper classifieds. And if you look 25 years ago, the biggest media companies in the world are not the biggest media companies in the world today. And innovation came and did that. I had a meeting this morning at the Condé Nast building in Times Square. It's not the Condé Nast building anymore.
Tom Steyer (00:10:27):
The best industry in the United States in the 20th century was newspapers. They're local monopolies. That's where people advertise. I mean you guys all look too young to remember this. So I will now inform you that the way that you got an apartment, the way that you got a job, the way that you bought a used car was you look in the classified ads and you only looked in the classified ads in your local paper because who cares if there's a job, an apartment or a car in Louisville, Kentucky if you live in New York? It's a local monopoly. People thought it was basically paid for by subscriptions. It was subscriptions got you to break even. Advertising was your income. And it was an amazingly consistent income. And basically newspapers went to a place where every town New York was different. It has, it's so big, but most middle-sized or small towns had one paper.
(00:11:16):
So they pretty much got to charge what they want and it was really consistent and it was like a football team. Now you couldn't really lose come the internet. And just to be clear, when the internet came in and it became clear, you could advertise on the internet, the analysis was it's going to stop the growth of newspapers instead of going like that, it's going to go like that. And of course it went like that. And in fact a bunch of very famous, incredibly valuable newspapers got sold for basically their asset value. It's their building worth. What are the things that they'd invested that can be used for something else? And so I think a predilection in this world to believe that the foundational status quo will stay the same. And basically, particularly in business, that's not true. If something is cheaper, faster, and better, then there's a very consistent s-curve to adoption, which is the time when it's struggling to be better and people are start and early adopters are doing it. And then when it really gets cheaper and faster and better, it goes up almost vertical and gets to usually about 80%. And that goes right back to whale oil. And it goes back to every big technological change that basically it follows that s-curve. And we're seeing it in a lot of places in the world right now in terms of renewable adoption, EVs, heat pumps, batteries. This is not something that's changing and it's not something that's going to happen. This is something happening right now.
Cody Simms (00:12:43):
As I shared with you backstage, when I was 25 years old, I worked at the New York Times and my job was running the online classified business at the New York Times. It was online, but still I saw what was happening to the broader classified. I mean it was going to zero.
Tom Steyer (00:13:00):
I was teasing Cody that every night he called his mom and said it was a bad day, mom. Of course it was a bad day. Tomorrow's going to be a bad day.
Cody Simms (00:13:06):
But the canary in the coal mine was there. It was so obvious this was happening. Of course, if you run that company, you have to keep trying to make it work as best as you can. What else are you going to do? That's the conundrum I think the oil and gas companies are in today. They have shareholder obligations, blah, blah, blah. You can't just shut it off. And actually my worry that I really want to hear your feedback, you hinted at this a little bit. As humans, we've been pretty good at inventing new forms of energy, biomass, then coal, then oil, then natural gas, then solar, then wind, nuclear was in there somewhere. We've been pretty bad at shutting off forms of energy. We still use this as basically the same amount of biomass today as we used 150 years ago. As humans, how do we get to the point of bending those curves down?
Tom Steyer (00:13:53):
Let's start with a very simple idea, which is that energy is wealth. It's funny, if you look at the correlation with how much a society uses energy and how much income they have, they go like this and they always have. And if you look around the world at how productive different societies in the world are, their energy use is highly correlated with how much income they have. That's really been true since 1800. This is what's driven the incredible change in people's living standards around the world and continues to. And so the question is going to be obviously nobody went into the oil business or the natural gas business or the coal business with an intention of screwing up the world. They went into it because they thought they were providing, making the world prosperous, were desperate to have. And that drove prosperity in an absolutely fundamental way.
(00:14:45):
And the issue of course is that unbeknownst to them and unbeknownst to the rest of us, there was an invisible odorless pollution involved with it that ramped up. And now we're seeing that the implications of it are very broad and dramatic and it's not being charged for. I always used to say to people, if Cody and I are living next door and I set up a garbage business and my job is I just take garbage and put it in Cody's lawn, is that fair? He may not like it, but that's really all we're talking about. Somebody who unbeknownst to themselves was polluting for free and now it's on huge scale. And I think human beings hate. I think it's fair to say no elite in the history of the planet has ever given up their privileges willingly, ever. And so the question is how do we change this over knowing that if you look at 42 gigatons of emissions, so that's the estimate, just choose could be a little different, but just take that number and you ask what is it a ton of emissions worth?
(00:15:43):
And you can use a lot of numbers and the math is pretty easy, but I'll just tell you, the US government says that a ton of emissions has a societal impact of $190, $7 trillion of subsidy. That's a lot of money. And I think that anybody who's in that position is going to feel like, why are you taking that away? So I think the only way, and that's why I wrote the book, "Cheaper, Faster, Better." The only way we win is better products. Last year, 86% -- 2023 -- 86% of new electricity generation was renewable. Nobody did it to be nice. Texas has tripled their solar in the last five years without any desire to do solar. Why would they put in so much solar? Why do they do so much wind? Because it's a good deal and they're smart. And so they're sitting there and everyone around the world is saying, this is cheaper. Let's do it. This is a better deal for us. And so when we look around how this is going to get redone, it's going to get redone because people are going to look at something and say, the EV's cheaper. It's cheaper to maintain, it's cheaper to fuel up and it handles better. How can we not do this, honey?
Cody Simms (00:16:43):
Your whale oil metaphor in the book may be a good metaphor, which is yes, we've always added source of energy, but we don't use whale oil anymore really. And so we have retired, some of them when truly a better alternative emerged.
Tom Steyer (00:16:54):
So it's a complicated problem. It's an all of society solution. It is going to get solved in the marketplace in my mind with a very high degree of probability. But there are a lot of things that are going to impact that.
Cody Simms (00:17:06):
Alright, take us back to 2012. When you stepped away from Farallon, why did you decide to leave and go all in on climate?
Tom Steyer (00:17:14):
I tell this story in the book, which is basically I would start by saying for whatever reason, people in my family have gone into the woods in the United States for hundreds of years for their who knows spiritual satisfaction to get away from their family, could be any one of those reasons, but they've done it and I've done it too. And I went and worked in the summer in Alaska in 1981 as I wanted to see what North America looked like before the Europeans showed up, the wildest place I could get to, I wanted to go see.
Cody Simms (00:17:45):
You were in an Exxon office, weren't you?
Tom Steyer (00:17:47):
I'm very sorry Cody didn't talk about this, but I was a soccer player. I've had 11 knee operations and I couldn't really get a physical thing. So I got a job telling the state of Alaska what to do. I was 24 with their excess tax revenues coming off the north slope. They had no people and billions of dollars. And they were like, okay, what do we do with this? So I spent the summer traveling around Alaska for them to ask everybody in Alaska what they thought and on the weekends going into the woods and I thought this is the greatest ever. And so when my kids got to be pretty old, my wife and I and our four kids went up in 2006 to look at Alaska so they could see, okay, this is what it looked like before the Europeans showed up and all we could see was this gigantic melt. We're all looking at each other like, oh my god, it was so obvious and I'm sure I'd read about global warming, but it was a visceral image that this is definitely happening at gigantic scale and the implications have to be huge. And so we went back home and sat around the kitchen table and said, okay, is this something we can be helpful in? And all of us in our own different ways have decided in some way, shape or form to try and be helpful.
Cody Simms (00:18:55):
I've had multiple people on the show who decided to get involved by visiting one of the Poles essentially. And Kim Stanley Robinson on the show went to, I think it was Antarctica, and that was when he decided to get involved in focusing on climate, seeing it firsthand must be incredibly dramatic.
Tom Steyer (00:19:16):
There are a lot of complicated things in this world. My mother ran school volunteer programs in the city of New York in public schools and Brooklyn House of Detention. And that is a complicated hard thing to do. And there are a lot of people who do a lot of really complicated hard things out of the goodness of their heart. Climate seems less complicated to me, and I'm sure that was part of it was it seems like a huge problem. It's really about human suffering, ultimately avoiding human suffering. But it also seems something that seems less complicated to me from an emotional standpoint than working to try and teach English as a second language or 12th graders how to read or how to do math problems. And so it seems something like we could actually, we have to solve it, it's great to solve it and we can solve it and we will solve it.
Cody Simms (00:20:02):
So you were at the time and still are clearly a capitalist, you'd made a lot of money as an investor. At what point did you say, okay, this is a problem. I'm going to solve it and the way I'm going to solve it is by taking a capitalist investment approach. And I believe this can be a positive financial thing.
Tom Steyer (00:20:23):
Let me say that. If anyone has any other ideas, I've already tried them. I didn't understand why we had this problem and I thought this is a great thing for the U.S. This is the kind of thing we do. And so the first thing I did, so now I'm going to sound a little pompous, so I'll apologize before I sound pompous and then sound pompous. So the first thing I thought was going to be true was it's a tech problem, it's tech. We need to have tech. And so we set up an agency at Stanford University to basically give people grants who were doing climate tech research so they could start companies. And we did that in 2007 when I got back from Alaska. And just so you know, here's the pompous part. One of those companies did a $600 million financing yesterday. The companies are worth more than $10 billion.
(00:21:09):
I don't know the last exact number. We put in $45 million bucks to get it going. There's $75 million bucks in it now and the companies are just boom. And we thought Stanford's like this tech place they should do for climate what they did for IT. And in fact, Stanford now has a school of sustainability that's much better financed than we ever financed it. But the idea was it's a tech problem. And then we got into it and we realized it's not just a tech problem, it's also a political problem and we need to have some form of public private agreement on what we're trying to accomplish and awareness of where we need to go. And I spent a long time being an advocate, really hopefully in a bipartisan fashion to say, we have to do this as a society. We can't do it as just one party. This is something that will be great for us to do. And so it's not just that we have to do it, but it's a challenge, but it's the huge opportunity for us economically and it's a huge opportunity for us to remember what America stands for, which I totally deeply believe that this experiment was about leading the world in multiple ways, including values.
Cody Simms (00:22:18):
Was that your motivation for setting up NextGen?
Tom Steyer (00:22:21):
So NextGen is registering, engaging and helping turnout people between the ages of 18 to 35. People 18 to 35 vote at half the rate of other Americans. We felt just in terms of having a representative democracy, people like to slice it by gender, by race, by all these things. And we're saying no, the biggest unrepresented group of people in this country are young people. If we can help them participate the way everybody else participates, we have a better democracy, we'll get better answers. And we've been doing that for 12 years. I'm a huge believer in what that means for us in terms as a whole, society making good decisions. Young people, they're the most climate concerned. I mean you originally called it NextGen Climate because we wanted people voting who would put climate into their thinking and would think for sure this matters to me for sure this is going to impact my life. I never believed it, but a lot of people my age 10 years ago literally would say to me, it's not my problem, it's my kid's problem. And I'd say, no, it is definitely your problem. You are definitely going to live through this.
Cody Simms (00:23:24):
How did Trump in 2016 influence you?
Tom Steyer (00:23:27):
So I'll try and say this as nicely as possible.
Cody Simms (00:23:29):
You don't have to hold back really. It's okay.
Tom Steyer (00:23:32):
I've lived in California since 1981, but I'm originally from New York and one of the things I say in the book is sharpen your bullshit detector. When you're three years old, you walk through Central Park and there are people playing three-card monte and you got to realize they're going to rob you. You're not going to win at three-card monte, so don't give them anything. And I think that's a sort of cynical New York attitude I do, which I have. And I think almost everybody in New York has to have to be able to live here. So when I watched Donald Trump, I was like, oh my god, this guy's a three-card monte guy. He's sitting here and he's just messing with us. Does anyone believe this? And a lot of people believe it and I feel like as it's gone on, my initial reaction that he's a BS-er who's trying to pull the wool over our eyes and sell us a three-card monte game where he walks away with all of your money, hasn't changed one bit. That's not my image of America.
Cody Simms (00:24:27):
I'll share some personal trauma I get every time I fly into JFK. I'm sharing this. We're in New York, which is, I was flying here on election night in 2016 and I was watching the results on my laptop and Hillary was winning and my laptop battery died and then I landed, opened my phone and was just like WTF and I got off the plane, I went to Shake Shack, I ordered a fried chicken sandwich, french fries and a beer. It was like 10:00 PM at night and I sat in the airport by myself. Anyway, what prompted your 2020 presidential run?
Tom Steyer (00:25:03):
So the reason that I ran and I announced super late, which was a very stupid strategic thing to do, but if you will notice you probably didn't, but I definitely did. No one was talking about climate in 2019. They kept having these debates where they talked about single-payer healthcare, which was never going to come in, and we have not discussed it for one single second after the election in 2020, and it really was never on the table for some reason that's what they wanted to talk about. And I thought no one is getting to hear in the national conversation, which is the primaries in the United States about climate and that is a terrible thing for our country. And to be fair, the other thing I thought was no one's talking openly about race and in the United States, if you're not talking about race, you're missing the underlying theme to an awful lot of our politics. And I felt, okay, we should be talking about these things and I'm going to talk about them. And I did. By the end of that race, every single person running on the Democratic side had a very detailed climate plan that they talked about all the time, none of which existed before.
Cody Simms (00:26:05):
When did you know you were going to start Galvanize?
Tom Steyer (00:26:07):
So after I dropped out of the presidential race after South Carolina, I did two things. I co-headed the Biden campaign's climate outreach, which I did obviously until election day. And I also ran a Covid recovery task force for the governor of California, which I also did pretty much to election day. And both of which I found between the two of 'em, it was a full-time job, but I really enjoyed both of them, both things I care about. But when they were over, they were over and I thought, okay, I'm a professional investor who cares about climate. I always say we've won the climate argument. We haven't won the climate war, which is Republicans agree with us on climate. They just don't prioritize it. But if you ask them, is it happening? Should we do something? They say yes, and I can show you the polling over a long period of time about what that looks like.
Cody Simms (00:26:56):
It feels like the era of climate denial is mostly over, it's over. It's just are you doing anything right?
Tom Steyer (00:27:02):
Exactly. And so I felt, okay, this is about execution and by the way, if you look at the natural world, and we can go as deep on that as you want to go, this is about execution now. And I thought, okay, what does it take to execute? It takes a bunch of money, it takes smart investment, it takes getting it done, and I felt, hey, I'm a professional investor for over three decades and I know something about the problem here. Why don't I take the expertise I developed over those 30 years and apply it to this issue in a way so that we can actually develop the capabilities and develop the platform to get this done as fast and effectively as possible.
Cody Simms (00:27:39):
How does timing factor in? 2020 was a moment in time. I assume you're glad you didn't start this in 2010 as the clean tech crash was happening.
Tom Steyer (00:27:50):
To be fair, of course, what Cody's saying is true and why is that true? Because when you're at this part of the S-curve, if you look, I think Solar's gone down way more than 90% since 2010. Wind has gone down way more than 90% since 2010. Batteries have gone down way more than 90% since 2010. All of the ability to cross over to cheaper, faster, better has happened since 2010. And the idea that you can win this fight in the marketplace by asking people to be nice, trust me, that doesn't work. What works is this is a good deal for you.
Yin Lu (00:28:24):
Hey everyone, I'm Yin a partner at MCJ here to take a quick minute to tell you about the MCJ Collective membership. Globally startups are rewriting industries to be cleaner, more profitable and more secure. And at MCJ, we recognize that a rapidly changing business landscape requires a workforce that can adapt. MCJ Collective is a vetted member network for tech and industry leaders who are building, working for or advising on solutions that can address the transition of energy and industry. MCJ Collective connects members with one another, with MCJ's portfolio and our broader network. We do this through a powerful member hub, timely introductions, curated events, and a unique talent matchmaking system and opportunities to learn from peers and podcast guests. We started in 2019 and have grown to thousands of members globally. If you want to learn more, head over to MCJ.vc and click the Membership tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (00:29:26):
You have three sort of focus areas of Galvanize, I think venture and growth equity, real estate, and then public equities. I'm most familiar with what you're doing in the venture space. Talk about is there a flywheel across these different strategies that makes them each where you want to focus?
Tom Steyer (00:29:43):
So let me give you a little preamble before I answer Cody's question, which I will answer. I started this firm, Farallon Capital, and it originally started as something as an arbitrage firm, which you don't have to know what it means or anything else, but what you do have to know is this. We came up with a new way of thinking about investing and we didn't even know that we had come up with a new name until the head of the Yale Endowment who is a good friend of mine, described it as absolute return investing. And we brought that perspective and way of thinking about investing to literally 20 different categories and verticals in traditional investing. So as an example, we did distressed debt, we did distressed bank debt, we did value, we did real estate, we did healthcare finance. We were the biggest independent film financiers in the world.
(00:30:27):
What does that have to do with me? Nothing. In fact, I told the people running it, if you start telling me if they're good movies, you're fired. It was a new way of thinking about investing and we did at least 20 startups under that rubric within one fund. So Cody's question is why are these three things? I'll describe the other two strategies and let me explain why there is a flywheel and what we're trying to accomplish. In real estate, we are buying existing buildings, mostly industrial buildings and turning them to net zero. That's what we're doing and we believe that we can add a lot of return to every one of those buildings so that if you buy them and do what we're doing, we're going to make more money than if we didn't or than anyone else is going to do. Just so you know, there are eight net zero commercial buildings in the United States, eight in 2050 of the existing buildings, 80% of them will still be in use.
(00:31:19):
So the idea that we're going to build new buildings that are net zero that ain't getting us there, and by the way, if we really wanted to tear down all the buildings and rebuild them to net zero, that would be worse than anything we could do. So our point is we have to show that it's more profitable that it's a great deal. If you're not doing this, you're a dope. People in the real estate industry are not interested. No one else is looking at what we're looking at and we believe we can show substantially better returns and do a lot of this ourselves, but everyone else sit there and go, okay, I have to do this or I'll look like a dope. No one will give me any money, so I'm going to start doing this. That's one strategy. The second strategy, which is public equities and normally in public equities, it doesn't matter if anyone in this room buys a thousand shares of IBM. IBM does not care.
(00:32:03):
You bought it. Someone else used to own it. Now you own it, you care. Nobody else in the world cares. That is not what we're doing. What we're doing is we're trying to get the companies that are leading this transition, including companies that are big emitters that are trying to reduce their emissions dramatically and engage with them. And so they're not the kind of people who go in and say, you dirty bastards, we're going to throw you out if you don't do what we say and we're going to have a proxy fight and we're going to malign you in the press and tell your kids you're an idiot. What we say is these are people who already want to do this. We have a lot of technical expertise, science expertise, policy expertise. We're going to go in and help you do this faster and make more money.
Cody Simms (00:32:45):
This isn't activist takeovers?
Tom Steyer (00:32:47):
It's activist partnership. And why is that true? Why are we doing that? First of all, everyone wants to hear this because if you're really trying to do it and someone comes in and says, we know a lot about this and we'll give it to you for free, that's a good deal.
Cody Simms (00:33:00):
It's like a startup bringing an investor onto their cap table who can help them.
Tom Steyer (00:33:04):
And of course we do that too, the early stage tech companies, but our whole goal with the early stage tech companies is exactly what I just described, which is to go to a CEO and say you're doing a financing, what really counts is your partner, not the price. Of course they'll care about the price. I'm not disingenuous. Of course they'll care about the price, but having the right partner is actually more important than having the best price. And we say, look, we have at the platform level a bunch of scientists and engineers. We have people who really know the policy. We can really help you build your company. We want to be the best partner to CEOs and entrepreneurs in the world. We want everyone to think that's the people we want sitting next to us and helping us build this company. Because building companies is hard and little companies don't have that much money, and so if you can help them do that, that's a really valuable service. We can't do that in the early stage venture and growth business where we say we want to be your best partner and say, don't pay attention that we're trying to throw out these CEOs because culture is culture, values are values and we're people who say the way we're going to build the most value here is by partnering with people, by being helpful and trustworthy. That's our culture and that's got to be our culture and we can't turn around and suddenly knife somebody in the back. Can't do two things at the same time.
Cody Simms (00:34:18):
I'm hearing you say on the public equity side, this is not a hedge fund strategy at all. This is very much a long strategy. You're in it to try to help company building.
Tom Steyer (00:34:27):
It's long in terms of you own it as opposed to be shorting it. And it's long in terms of we have a long timeframe in terms of building real value in something where we feel the winds at our back in terms of this transition, but also in terms of building great companies over a long period of time and helping them as much as we can.
Cody Simms (00:34:45):
In the book, you talk about what you call your five plus one approach, the five investment categories, electricity generation, transportation, manufacturing, agriculture and buildings, and then the plus one, which is sequestration. How much do those themes play into the work Galvanize does?
Tom Steyer (00:35:04):
Of course we're interested in all of them. We try to participate in all of them, but just so you guys know, I don't think that what I'm saying in that is anything particularly clever. I think most people think about those as the big physical verticals for emissions and then plus sequestration. I think to me the most interesting thing about this, Cody, is to try and figure out what are the cross cutting capabilities that are going to let us succeed in all six of those? And that to me, when I think about this and when I think about it strategically, yes, electricity are going to need to have new sources of clean generation. Yes, in buildings, are there going to be specific things we need to do in buildings? Yes. You were asking is there a flywheel between the different products we're doing? For sure, because if you're trying to help a public company decarbonize and all the new technologies around decarbonization, it's probably pretty helpful. If you know those technologies and you're trying to decarbonize a building, that's pretty helpful. We really believe that between the different strategies we're following, that's really good. But we also believe that there is going to be information at the platform level in terms of science, in terms of strategy, in terms of policies, in terms of politics, it's really relevant, so we really feel like this is domain expertise coming at you as many different ways. Domain expertise is how you outperform.
Cody Simms (00:36:27):
It seems like your venture portfolio in particular is overweight, not overweight, but more weighted software and data than hardware hard tech. I assume that these other parts of your strategy on real estate and public equities, those companies can use those data platforms would be part of the idea.
Tom Steyer (00:36:43):
It is. The other thing that's true is one thing about climate investing, it's investing and what we try and say that we're trying to bring domain expertise with traditional investing expertise, people who've been investing successfully professionally for a long time and have the track records to prove it. And so if you think back, Cody was referencing the innovation and expansion fund that we raised really started at the beginning of 22, so it's two and a half years old, but if you guys remember, and everyone looks old enough to remember 2022 money was free. Remember it was zero cost of money, the fed funds rate was zero, there was quantitative easing, so really the cost of money was negative, and the assumption was that would be true forever. When we were looking at that, it's pretty sure that the cost of money is not going to be zero forever. In retrospect, that doesn't seem to be true. At the time, it seemed like a lot of people thought it was true and that changed the way
Cody Simms (00:37:34):
You mean the status quo will not go on forever. To take your theme.
Tom Steyer (00:37:38):
Yes, but everybody assumed it would, and there were a lot of assumptions and particularly in capital intensive businesses, if capital is free, you price the current round differently than if the fed fund rate's going to be five and a quarter to five and a half. In retrospect, it seems obvious at the time it seemed difficult, but particularly in capital intensive businesses, if you're not charging for capital in your projections, you're probably going to be overpricing stuff.
Cody Simms (00:38:01):
How does your firm engage with oil and gas companies? Do you do customer discovery with them? Are you looking forward to them contracting with your portfolio companies buying their solutions?
Tom Steyer (00:38:12):
The way that I think about oil and gas companies is a couple of different ways, but let's start with the model that I would like oil and gas companies to take, but since I'm not running an oil and gas company, I can't dictate this is the model of the drug companies. The drug companies have not been particularly successful at finding new drugs. Like what the drug companies have is a lot of money and a lot of distribution. But the people who've been really good at starting new drugs are the biotech companies because that's three human beings from UCSD who go, let's go into a lab. I think we can come up with a new drug and if we do, we're going to make a lot of money. And so they go into a lab and those guys tend to be pretty good at finding new drugs and they're not very good at distributing them and they don't have tons of money, but who has tons of money in distribution are the drug companies.
(00:38:59):
So they buy the biotech and then it's in every doctor's office in the United States, and the drug company does well, the biotech company does well. It's a pretty good ecosystem. The oil and gas companies have a ton of expertise, just so do the drug companies in terms of energy. They have a ton of money, they have a ton of distribution, and so to the extent that they are performing that function, I say great, and we are seeing that to some extent. One of the things, I'm sure a bunch of you guys know this, it's a pretty well-known thing is that enhanced going down deep into the ground to get steam and to get hot water to use for electricity is something that we're now going down 5,000 feet,
Cody Simms (00:39:41):
Geothermal.
Tom Steyer (00:39:42):
It used to be 500. They're using oil and gas techniques. They're using oil and gas rigs. They're using oil and gas workers and to some extent they're using money from oil and gas companies, all of which I say is great. If that is a function where we can go, which is a hundred percent clean, where the expertise, the money, the people, the supply chain is all incredibly important. And do I think there will be more of those? Unquestionably, there will be a lot more of those. Do I think we're going to have to ramp down our oil and gas production to the world? Yes. Do they believe that? As I said, I don't think they do, but my question is can we call them in as much as we call them out, can we get them to join in a way that is really good for them where they can see a model where they can be really productive and profitable and it works for their shareholders in a way that also works for us and cheaper, faster, better. If they think it's cheaper, faster, it's just like Texas tripling their solar. They're going to do it because it's smart and they have a lot of expertise and a lot of money, and if they turn into the drug companies, God bless 'em.
Cody Simms (00:40:45):
The book, the subtitle is "How We'll Win the Climate War." War is an antagonistic word. It's an us versus them, and in the book it's pretty clear that them is fossil fuels. At least it felt like that way. As a reader, that was an intentional choice. I know you also use the metaphor of war as referring the greatest generation and referring to the what did you do in the war? How did we all come together to solve this problem? But there's also the other side of the war who's on the other side? I'm curious how that metaphor sits with you.
Tom Steyer (00:41:16):
Let me say this, capitalism's competitive. It's creative destruction, right? Isn't that the most commonly used phrase and so it is a competition. Cheaper, faster, better implies that you're cheaper than something else faster, better than something else. And I don't believe we're going to win this by not being better and not outcompeting and I played sports My whole life, I'm used to the idea that you have to try really hard and you have to outcompete. If you're not doing that, you're not going to succeed. And I believe that in this case, that we're going to have to do a better job than fossil fuels. We're going to have to have a cheaper product. It's going to have to be a disruptively cheaper, better product, or we won't win. Is that war? Not killing anyone. It's doing the opposite. Do I consider it to be productive and positive? I do. Do I consider it to be competitive so we better be practicing every single day harder than everybody else? I think that.
Cody Simms (00:42:11):
To be competitive on the open market means you have to win on pure economics. When does this stop be considered an impact investment category? I'll say this. I would
Tom Steyer (00:42:21):
Say that investors around the world, so asset owners, whether it be foundations, endowments, families, sovereign wealth funds, all would like to have a positive impact on the world. They really would, all of them. I have no doubt about it. There's no one who's out there going, we need to destroy the world and how do we get paid for it? Everyone wants to think that what they're doing is positive and they mean it. But if you're running a pension fund, you know what you need to do? You need the money for the pensions of the people you're representing. I think the Yale endowment pays for 50% of Yale. They need to care about their returns. I was just listening to someone who's a very well-to-do, guy who is using his money in a lot of climate related areas and he said, look, I absolutely care about this and I absolutely care about being the steward for the next generations of my family being able to have the same kind of wealth that I have.
(00:43:09):
Absolutely care about it. So when does climate investing stop being impact investing? Lemme say this, we can't give up on returns. We have to get returns. Returns scale you on impact. Profit scale, kindness doesn't scale, so we absolutely have to measure returns and succeed with regards to returns, but secondly, we also have to measure impact because just because they need to pay for their pensioners pensions doesn't mean they don't care about impact. It just means they have a real fiduciary obligation that they take seriously and they have to take seriously. They also care about impact, and I believe that if we're getting good returns and show that and also show the impact just to choose Yale, pick on Yale where I went for undergrad, so it's not like I'm being mean to Yale. If we get good returns and we can show the impact, we could call up the Yale Daily News if they didn't do any of it and say, you should just know your 51 billion endowment didn't get good returns and didn't do a darn thing in climate and they were both available. That is not something that anybody in the Yale investment office ever wants to happen.
Cody Simms (00:44:13):
Related to all of that, at some point does climate tech stop being a category and it just is energy? I think back 15 years ago, firms had a mobile strategy and 25 years ago firms had an internet strategy. At some point we're just talking about this is energy, this is ag, this is fuels, these are not sustainable ag or regenerative ag or sustainable fuels. It's just is what it is.
Tom Steyer (00:44:37):
Of course, I believe that, of course, I believe what Cody's saying. I'll tell you one story and then I'll apply it to a somewhat touchy subject in climate. So in like 1996, so at the beginning of the people's awareness of the internet, I was talking to a friend of mine in San Francisco who's a venture capitalist who I'd gone to high school and college with, and I referred to the internet companies and he said, Tom, are you an electricity company? I go, no. He goes, do you turn the lights on in the morning? I go, yes. He goes, so stop calling 'em internet companies. The internet is a tool to deliver goods and services. That's all it is. Everyone's going to use it. Everyone's going to be an internet company, start thinking about what they're delivering. Check. Tom, shut up. Yes. Now let's talk about this in terms of climate for one second, and what's a climate company and what's not a climate company.
(00:45:24):
The way that we're dealing with this around the world, but specifically in the United States of America is we're not charging for pollution. And so there are a bunch of people who are emitting a bunch of stuff not paying for it, and we're trying to build companies that provide the same service cheaper and don't emit anything. Honestly, on a grand scale, that's what's going on. If the company that is emitting a million tons of CO2 was also paying for their pollution, honestly I wouldn't care. I'd say like, you know what? That's net zero. We're going to net zero. We're not going to zero. So if you can show that's true, and that's really where we're going. As you guys know, there's a huge controversy about insets versus offsets and everyone's like, no, no, no, no. Only insets cost offsets. We need 10 billion tons of offsets. That's the prediction in 2050.
(00:46:16):
So the idea that offsets don't work, then our whole theory of net zero doesn't work. To me, once we get to a point where we just say a ton is a ton, we can measure it. We can charge for it. Everything's cool. We were driving down here in a taxi cab and people were double parked, and I was like, if they just pay us $250 bucks, we could pay for New York. All those double parkers. I wouldn't be mad at 'em. It's like, thank you. You're paying our taxes. Well played, and that's how I feel about this. Once we get to a point where everybody has a level playing field and all you're doing is trying to be cheaper, faster, better, with all of the costs included, it's just business.
Cody Simms (00:46:50):
It seems like investing in measurement again comes back. You have to be able to measure it to be able to get there.
Tom Steyer (00:46:54):
You can't measure it, you can't manage it.
Cody Simms (00:46:56):
Okay, a couple of timely topics, permitting reform. In the book, you refer to yourself multiple times as a climate activist.
Tom Steyer (00:47:05):
I really was. Now I'm a climate investor to be fair.
Cody Simms (00:47:07):
Climate investor. When I think of the history of activism in the us I think of conservationism, I think of environmentalism. I am hearing now in some cases that mindset is halting progress on getting clean energy deployed because of permitting requirements. And interestingly, it almost feels to be focused on climate tech today, you almost need to identify as an industrialist to get stuff out the door and in the ground, and those seem at weird odds with each other. I'm interested to hear your perspective on that.
Tom Steyer (00:47:46):
I'm sure everybody has their own story, so I'll just tell three quick ones. I have a friend who built a electric line from Wyoming, from the largest wind farm in the United States in Wyoming to California. Took him 18 years. Then he sold it recently for a great price. I said, would you ever do that again? And he said, I'd rather poke my eyes out. I have another friend who really was responsible for getting a similar line built from New Mexico to California 16 years, and I think the estimate in California for offshore wind, I'm just picking on my home state where I know the numbers. If things go well it's seven years from planning to actually hooking it up. Seven years, that's 2031 and our deadline's 2030.
Cody Simms (00:48:31):
There's a time value to this carbon stuff.
Tom Steyer (00:48:32):
If we don't get it done by 2030. At some level, we've missed the most important window. In terms of permitting, of course, we know that the US has real issues in terms of trying to come to quick decisions, and those have to be shortened. There are a lot of ways to do it, and we absolutely need it, and I think what it's really going to force is we do have to put a lot of pressure on this to get it to be quicker, but I think the other thing that's going to be true is it's going to force us to do so much more stuff in the existing envelope. So for instance, I think we're going to use a lot more of the existing roofs because they're there and you don't need to get them permitted. One of the companies we invested in Veir is trying to show you can carry five to 10 times as much electricity on the same grid. You don't have to build five to 10 more grids. You can make the existing grid much more efficient through technology, and so do I think we're going to use a bunch of the right of ways that exist that are permitted, that you don't have to get permitted in order to get things done at a completely different speed. Yes, yes, we're going to have to improve the permitting process, but political processes are tough to change. We're going to use a lot of technology. We're going to use a lot of the existing footprint to do things faster because we have to.
Cody Simms (00:49:47):
Could spend more time on this, but I'm going to try to wrap, run us through a few topics. This one is an incredible disservice to have as a quick topic, but China and India,
Tom Steyer (00:49:57):
What are those?
Cody Simms (00:49:59):
Is it possible to make a dent in climate without a focus on China and India?
Tom Steyer (00:50:03):
Just to give you the numbers, and again, I know that people in this room probably know more than I do. China, 33% of emissions, biggest producer of solar panels, wind turbines, batteries, EVs the biggest kahuna in climate in the world at every single level. Can we do this without China? No, of course not.
Cody Simms (00:50:21):
And also their only energy resource is coal.
Tom Steyer (00:50:25):
India, most populous country, the world expected to have five times as much electricity generation in 2050, probably at this point tied for the third biggest emitted at around 7% globally, but with a huge amount of the change in the world coming specifically from India. I could go through the other countries, but it's the biggest. Do I think we can do this without India? No, this is global warming. So in effect, we are going to have to cooperate, we're going to have to have standards, we're going to have to share technology.
(00:50:53):
We're going to have to agree how we control and regulate this as a globe. And so ultimately, is that part of what we have to accomplish? Absolutely. Is that something that the United States traditionally has been a leader in because people think we actually might be telling the truth and not totally self-serving? Yes. Is that part of what our country stands for and has stood for a really long time? Yes. Is that a critical part of who we think we are and what we stand for? Absolutely. Does it make us better and off as people? Yes. And is this a chance for us to reestablish together our very divided nation in terms of accomplishing something awesome that we can be proud of and think of importantly? Yeah.
Cody Simms (00:51:35):
Sharing technology with China, not at the top of the list right now for the US government.
Tom Steyer (00:51:40):
This is a place where US China cooperation still is at the highest level. Granted, that's a very low comparison, but I know that the so-called American, Chinas are, and this is not private information. I think everybody knows this was over in China last week working to try and get some of this resolved and trying to make sure that the lines of communication were open. We all know that BYD can produce an under $14,000 plugin hybrid that goes 1200 miles. That is a disruptive product. China is selling over a million EVs a month. Over 50% of car sales in China are EVs going to 80% really fast. Biggest car market in the world. So when we think about can we do this without China? No.
Cody Simms (00:52:28):
You also can't allow the US manufacturing base to hollow out so quickly that you lose all political will.
Tom Steyer (00:52:34):
If we don't do this, if we choose to go backwards and try and recreate the 1950s, we can do that for a few years. It's not like the world's going to stop. The world is going to do this without us. We're just going to be poorer, less important and have less sense of purpose as a country. It's a huge mistake.
Cody Simms (00:52:53):
I'm hearing the do the obvious thing from you again here.
Tom Steyer (00:52:57):
There is no time in the history of the world when trying to put a wall around yourself, not learn, not interact, but basically hide from the rest of the world has been a good competitive strategy. That is a terrible refusing to compete is not the way to win, I promise.
Cody Simms (00:53:13):
Alright, next quick topic. Also ridiculous one, hyperscalers and AI. Hhyperscaler, clever new name for big tech. I would say good branding probably and to date have been really positive in climate doing a lot to try to push clean energy. They have high margin businesses. They can afford to do that today, what happens when the hyperscalers themselves become the status quo?
Tom Steyer (00:53:36):
Obviously data centers and AI are driving huge amount of electricity demand in the United States. They're super competitive about it. They consider it a critical part of winning and they're deadly serious about winning and therefore there's a lot of concern that we will be building a lot of new dirty electricity generators. I think what's also clear is those very same companies who have been super positive forces in climate are really working as hard as they can to make sure that doesn't happen. And I think the real question at some point is the question that Cody originally brought up, which was this, are we replacing dirty energy or are we simply adding clean energy on top of the base of dirty energy? And it's really important that the math is not complicated. If we're not retiring those plants, if we're not reducing emissions, emissions are not going down.
(00:54:25):
And to be clear, emissions have only gone down one time, which was the first year of Covid when the economy fell off a cliff and we're above that and we're probably going to be higher this year. So when we think about this, it is absolutely critical that we not build 40 year infrastructure to solve a one year or two year problem. This is going to be a very complicated solution. You obviously saw that Microsoft is trying to reopen the three mile island nuclear plant. That's their attempt to be responsible. To be clear, those guys have been really working hard to be net zero. They're trying to do clean power in a way that I'm sure scares some people, but that's their attempt to be responsible, not irresponsible.
Cody Simms (00:55:01):
Alright, last topic. I think we're in an election year. We all know this, policies and incentives. So do you have a policy wishlist rather than just ask it open-ended, I'm going to set this up a little bit, which is the last four years in climate policy have obviously been incredible with the Inflation Reduction Act, et cetera, et cetera, and yet we talk about the $370 billion plus carrots, incentives going into driving clean energy and the oil and gas industry, the fossil fuel industry is receiving still trillions of dollars of taxpayer subs. Is there a point when that goes away or gets clawed back, is it realistic to expect that to happen?
Tom Steyer (00:55:42):
So let me give you my quick take on the IRA, which of course I love, which probably everybody in climate thinks is so great, but the IRA is like a carbon tax on its head. So in normal taxes, if you do something, if you double park, we charge you $250 bucks. That's known as a tax and a carbon tax would be if you emit a ton of CO2, we're going to charge you $190 bucks. What the IRA is saying is if you do the same thing as the guy who's emitting a ton of CO2 and you don't emit a ton of CO2, we're going to give you $190 bucks. It's a subsidy to try and pay people for not polluting as opposed to tax that charges people for polluting makes it a lot more complicated, but that's in place for better. But to me, when we think about how we're going to win this, and this gets directly to Cody's question about how do we ultimately really change this?
Cody Simms (00:56:34):
By the way before you go there, my fear based on what you just described is again that we don't tend to retire the old sources. We just start adding more positive ones on top of them, but the old ones stay the way they are.
Tom Steyer (00:56:45):
So if I could have one wish, the wish I would have, and I think I'm going to get it just so you know, because Christmas is coming and I'm feeling lucky both in the EU and in California, moderate, medium sized companies are going to have to disclose through scope three in 2026 or 2027 companies that do business in the EU, companies that do business in California, and if you disclose in Europe or California, you are also disclosing in Timbuktu, you're disclosing in Rio, you're disclosing in Beijing, you have to disclose. So what I believe in is if we get disclosure and transparency so that we actually know and we can measure it, this implies that we've set up systems of measurement so that you can disclose. If we get systems of measurement and transparency, one include and have this in sequestration too where it's required, we'll get accountability. And what does accountability look like for somebody? Could look like a whole bunch of different things.
(00:57:43):
It could be that Cody's running a company that's emitting a million tons of CO2 and he says, I can't go Cody lives in Los Angeles. He can say, I can't go play tennis with my friends anymore because they hate me because they know that I'm emitting a million tons of CO2. So we have to change that. It could be just people saying, I now know I'll solve it, do it, and everybody does it voluntarily. Okay. That's one way of accountability. The other accountability is the people actually don't like him and they get mad at him and he feels immense pressure and shame to get it done. Okay. Then there's all the other voluntary forms. People won't go to work for him, people won't buy his products, blah, blah, blah. The pressures of people in society saying you're not doing the right thing, but ultimately if there are cheaper, better, faster products than Cody's that don't emit, ultimately society's going to force him to stop and that might be a long way down the road, but if we get measurement and transparency in emissions and sequestration, we win.
Cody Simms (00:58:44):
And presumably if companies have adopted these cheaper, better, faster solutions and transparency and accountability is out there, other people will see this company is using this technology and look what their emissions profile looks like compared to this one.
Tom Steyer (00:58:58):
I always say what we want is not this chief sustainability officer caring about this. We want the chief purchasing officer. It's just sitting there going, it's just money. This is just business not good enough. You can't come here and tell me that because it's just too expensive. We're not going to do that.
Cody Simms (00:59:15):
Your policy wishlist, your big one sounds like is making these accountability laws stick.
Tom Steyer (00:59:19):
It's really measurement. I think if we get accurate measurement across the board, everything else will follow.
Cody Simms (00:59:25):
What else should we cover? Anything else we should talk about? We should hit on? We covered a lot.
Tom Steyer (00:59:29):
I think it is important to say one last thing, which is this, and you could hear me say it a couple of times, but I really believe it. I know you guys are all here because you care about climate. I think that you're here because you care about climate and I do too. I also feel, and I said this in the book, this is something we have to do. This is something that people have to commit to. It is an all of society response. We should all be responsible. And honestly, as a parochial American, this is something that this country's built to do. We are built to try and solve the biggest problems, try and be out front. We've always been innovators in social policy. We've been innovators in technology, we've been innovators in finance, we've been innovators in how we get along, and this is a great chance for us to do all of that. That's why I'm so excited about this. I feel as if this is our chance to really refresh what we do in multiple ways, be richer and better.
Cody Simms (01:00:16):
I'm hearing from you a call to action of everyone in the room who cares and is listening and leaning in. Be a megaphone. Pull your friends in, pull your family in. Help people understand what's happening.
Tom Steyer (01:00:27):
Look, this is not going to get smaller. This is going to get bigger until we solve it, and I do think we'll solve it and I think we'll solve it in a way to be a cliche for one second. The old Hemingway, how did you go bankrupt? Two ways slowly and then all at once. I think we're going to solve this slowly and then all at once and we have to get to all at once.
Cody Simms (01:00:45):
Tom, thank you very much.
Tom Steyer (01:00:46):
Cody. Thank you.
Cody Simms (01:00:49):
Inevitable is an MCJ podcast. At MCJ, we back founders driving the transition of energy and industry and solving the inevitable impacts of climate change. If you'd like to learn more about MCJ, visit us MCJ.vc and subscribe to our weekly newsletter at newsletter.mcj vc. Thanks and see you next episode.