May 29, 2023
Chris Sacca on climate investing right now: The opportunity 'seems almost unfair'

Chris Sacca on climate investing right now: The opportunity ‘seems almost unfair’

Today, for a series of climate conversations hosted by global venture capital firm SOSV, we interviewed celebrity investor Chris Sacca, whose investment firm Lowercarbon Capital manages $2 billion of capital in a fund focused on nuclear fusion, another fund focused specifically on carbon removal, and the rest on a wide range of bets.

In our conversation, Sacca dismissed questions about whether efforts like carbon capture can work at scale. (“The naysayers feed me, actually.”) He also said – understandably – that he has “no doubt that we will have multiple trillion-dollar companies emerging from our portfolio.” It ended up being quite a broad conversation and you can watch it in its entirety at the bottom of the page. In the meantime, below are excerpts from our chat, slightly edited for length.

TC: The big news at the moment is the Inflation Reduction Act. It allocates over $300 billion to energy and climate reform, $60 billion to building renewable energy infrastructure and building wind turbines and solar panels. At the same time, it was not what climate activists really wanted to see. What do you do with it?

CS: Look, the president himself said it was a big fucking deal. And it’s. It’s a huge step forward for our industry, for our country and for the planet, there’s no doubt about it. Bless the militants. I like where their hearts are, but we have to be pragmatic about it, and we don’t have time for purity testing. . . It was better than we could have expected, frankly, and we’re glad everyone sat down to the table and found a solution.

Have you been consulted by anyone in Washington?

We weren’t. In fact, I have an allergy to Washington. One of the reasons we started Lowercarbon was that after years of rebuilding the democratic tech stack, I got a bit exhausted from a process that is so far removed from the ultimate solution. So we created Lowercarbon to say, look, we can create climate solutions now, where it’s up to us to deliver something that consumers and businesses want to buy from us. If we have a relationship with the government, it’s the government as the buyer. If free money falls from the sky, we’ll take it, but everything we’ve done now makes sense because unitary economics is here to go and compete head-on with petroleum-based products. It was actually just a bonus that the IRA got through, but we weren’t counting on it.

Your timing is remarkable, given that even if we were to go into recession at this point, that money will now flow into the economy, making climate investing relatively bulletproof.

[Climate investing] is recession proof, even without the IRA. All we do is provide a substitute good. This is what seems almost unfair. You spend years building Twitter and you put it in the App Store and hope someone doesn’t care. It could be a really well-designed product, but maybe nobody cares, when everything we’re building right now, we actually know the demand for it. And if we come up with a better, cheaper, faster, cooler, easier to use, and sexier product, we will even grow the market. So I think it’s one of the easiest investments we’ve made.

What happened during the war in Ukraine, the energy shortages Europe is facing, the global climate disasters on the planet, the commitments companies have made to decarbonize and the reality that clean energy and own products reaching price parity are just massive tailwinds that we’re trying to keep up with, frankly.

You came out last year with an $800 million fund. Then this spring you announced a $350 million fund dedicated exclusively to carbon removal. Why split this as a standalone effort?

So basically the carbon pollution that we put into the atmosphere, we have to get out. . . and it can happen in a variety of ways, from directly capturing air – those big fans in the desert that suck in air – to accelerating biological processes [like] crush rock that carbon likes to attach to, or grow algae or kelp. So we have a fund dedicated exclusively to that. It’s a booming industry; we’ve partnered with companies like Stripe and the Frontier Group that they brought together. And it was a separate fund because. . . we’ve seen the cost of building this material drop so quickly, and the disposable income and disposable expenses increase so quickly [that] it reminded us of the beginnings of Y Combinator [when] the cost of starting a business had fallen by several orders of magnitude.

Money doesn’t always produce results. It’s exciting that there are so many options now and so much money being invested in carbon capture, but are you worried that industry will say, “We’re putting money into this market” or “We’re putting money into this technology, so we can continue with our bad behavior”?

I’m not worried because, frankly, digging up and burning old dinosaur bones is expensive, so every time we take that out of a process or a product, we make money. And carbon has real value. When we capture carbon, there are uses. We turn it into jet fuel. We’re building it into things like concrete now, so there’s value in that. So companies can continue with what you call bad behavior, but it’s just bad business. And so yeah, I mean, greenwashing and fake ESG funds and stuff like that is bullshit. But the reality is that anyone who continues on this path will simply be left behind by the greatest economic transformation in the history of the planet.

Many skeptics wonder if carbon capture will work at scale. I recently read that the world’s largest direct air carbon capture facility, currently under construction, is only expected to remove 0.0001% of the carbon dioxide emitted globally each year.

When I hear that, it sounds like the person who thought there wouldn’t be a need for more than seven computers on the planet. Betting against technology, chemistry and physics is a bad bet every time, and if you want to line up against that bet, I’m here for you on the other side.

The reality is that we continue to see step functions and geometric progression and advancement of these technologies. So I like naysayers and I’m kind of like, “Okay, step back and watch.” Like, I’m at this point where I don’t care and I’m like, either you help or get the fuck out. Bless everyone who says that shit; they just haven’t been to the lab. They haven’t seen what’s happening, and they’re literally betting against what we see as a faster-than-ever rate of technological change. It’s computing power. I mean, the amount of computing power now available to a team of three scientists would have cost half a million dollars eight years ago. So now, in many of our industries, experiments that used to take a year or two to design, run, and digest can be done hundreds of times. per week. It’s literally such a steep curve.

You made a fortune investing in Twitter. I have to ask: Elon Musk as owner. Thumbs up or thumbs down?

With Twitter, we had the best intentions at the start, and that was really healthy. Now I feel like cigarettes have been invented again. I think Twitter is toxic. It’s addictive, and it attacks our most primitive dopamine instincts in the world. And I’m not convinced that anyone agitating for more free content and less moderation is going to improve the health of that environment.

I am saddened by what Twitter has become, and wish we had seen it. I think we were all naively excited about democratization, and giving everyone a voice and we were naive about how it would be militarized, and that’s it.

For the full interview, including a discussion around some of the (really interesting) bets Lowercarbon has made, from electric planes to lithium mining, tune in below.

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