1 00:00:00,440 --> 00:00:03,440 Before we begin, I'd like to share a few words from our 2 00:00:03,440 --> 00:00:06,240 sponsor, Arbonics. Thank you, Arbonics for 3 00:00:06,240 --> 00:00:07,920 sponsoring reversing climate change. 4 00:00:07,920 --> 00:00:10,120 You helped make this show possible. 5 00:00:10,280 --> 00:00:12,640 I'm so grateful to you and you deserve it. 6 00:00:12,640 --> 00:00:17,160 I don't like taking sponsorship from people whose companies I 7 00:00:17,160 --> 00:00:19,240 just don't believe I don't want to work with. 8 00:00:19,720 --> 00:00:22,560 And thankfully I don't have to because they're companies like 9 00:00:22,560 --> 00:00:25,080 Arbonics are willing to come and support reversing climate 10 00:00:25,080 --> 00:00:27,040 change. If you don't know about them, 11 00:00:27,320 --> 00:00:30,280 they're doing amazing forestry projects in the Baltic states in 12 00:00:30,280 --> 00:00:32,080 Europe. Europe has over 14,000,000 13 00:00:32,080 --> 00:00:35,280 hectares of underused land. A lot of its abandoned or low 14 00:00:35,280 --> 00:00:37,920 quality, not a lot is happening on it. 15 00:00:38,160 --> 00:00:41,480 It used to be forced, but it was cleared for farming as farming 16 00:00:41,480 --> 00:00:44,080 intensified. And then a lot of that farmland 17 00:00:44,080 --> 00:00:47,360 was later abandoned as the global food system move towards 18 00:00:47,360 --> 00:00:50,040 lower cost producers. The land just wasn't worth 19 00:00:50,040 --> 00:00:52,640 tending, and certainly not tending in a way that we would 20 00:00:52,640 --> 00:00:57,040 respect as regenerative and carbon sequestering process. 21 00:00:57,600 --> 00:01:01,400 It was just underutilized, maybe unloved Bionics uses technology 22 00:01:01,400 --> 00:01:04,599 to help land owners even find this land, and once they do have 23 00:01:04,599 --> 00:01:07,640 it, how to restore it back into carbon removing biodiverse 24 00:01:07,640 --> 00:01:10,480 forest. If you care about carbon being 25 00:01:10,480 --> 00:01:14,160 removed and you want to see Europe return to the forested 26 00:01:14,160 --> 00:01:18,000 continent that it once was, you should be looking at our 27 00:01:18,000 --> 00:01:19,960 bionics. Go talk to them. 28 00:01:20,160 --> 00:01:23,240 I had Lizette Lewick, their founder, on the podcast. 29 00:01:23,240 --> 00:01:25,240 The link is in the show notes if you'd like to listen to it. 30 00:01:25,640 --> 00:01:28,080 We talk about a lot of the tricky issues that surround 31 00:01:28,080 --> 00:01:30,720 durability and carbon removal and how does forestry fit in. 32 00:01:31,040 --> 00:01:33,800 It's a very thoughtful episode. I really like talking to her. 33 00:01:33,960 --> 00:01:36,440 They made it really easy to pitch our bionics on doing some 34 00:01:36,440 --> 00:01:39,640 business together because I want to see their work be successful 35 00:01:39,760 --> 00:01:42,840 restoring biodiversity and making forestry, especially good 36 00:01:42,840 --> 00:01:45,960 forestry, profitable again. Man that is a game changer and 37 00:01:45,960 --> 00:01:47,280 so important if you can. Pull it off. 38 00:01:47,760 --> 00:01:50,080 Thank you again our bionics. The link to check out our 39 00:01:50,080 --> 00:01:52,120 bionics website is in the show notes. 40 00:01:52,360 --> 00:01:54,280 You should listen to the show if you haven't heard it already 41 00:01:54,280 --> 00:01:56,680 that I do with Lizette. It will teach you quite a lot 42 00:01:56,680 --> 00:01:58,600 about how they think and what they're doing. 43 00:01:58,880 --> 00:02:02,160 And now we will feedback in to the rest of the show. 44 00:02:02,600 --> 00:02:04,480 Thank you for listening. Here it is. 45 00:02:11,400 --> 00:02:13,960 Hello and welcome to the Reversing Climate Change 46 00:02:13,960 --> 00:02:17,080 podcast. I'm Ross Kenyon, I'm a long time 47 00:02:17,080 --> 00:02:19,320 carbon removal and climate tech entrepreneur. 48 00:02:19,960 --> 00:02:23,040 I'm going to introduce my guest. There haven't been that many 49 00:02:23,040 --> 00:02:27,280 exits in carbon removal and Jim Mcdermott's thumbprint rests 50 00:02:27,280 --> 00:02:30,600 upon several of them. Before I get into Jim's 51 00:02:30,600 --> 00:02:33,680 background, if I could just ask you please become a paid 52 00:02:33,680 --> 00:02:36,240 subscriber to the show. It's 5 bucks a month, gets you 53 00:02:36,320 --> 00:02:39,040 ad free listening. You can do it through Spotify. 54 00:02:39,040 --> 00:02:42,520 It's really convenient, there's bonus content and it helps make 55 00:02:42,520 --> 00:02:45,800 the show sustainable, which is very important. 56 00:02:45,800 --> 00:02:47,760 I'm sure to you listening you want the show to continue. 57 00:02:47,960 --> 00:02:50,800 That's how you help. Thank you so much for doing so. 58 00:02:51,080 --> 00:02:53,120 If you can't afford to do that right now, but you still want to 59 00:02:53,120 --> 00:02:54,840 show your support a great rating. 60 00:02:54,840 --> 00:02:58,240 Five stars on Apple podcast as well as a review, very 61 00:02:58,240 --> 00:03:00,120 important. And also on Spotify, you can 62 00:03:00,120 --> 00:03:03,160 only do ratings there, but five star rating on Spotify, hugely 63 00:03:03,160 --> 00:03:04,640 helpful. Thank you. 64 00:03:04,960 --> 00:03:08,080 And in any case, let me tell you now a little bit more about Jim. 65 00:03:08,560 --> 00:03:09,720 There's so much to say about Jim. 66 00:03:09,720 --> 00:03:12,520 We don't even talk about it on this show, but I remember seeing 67 00:03:12,520 --> 00:03:15,800 his company's commercials on TV all the time when I was a kid. 68 00:03:16,000 --> 00:03:18,480 He's the founder and CEO of stamps.com. 69 00:03:18,760 --> 00:03:23,840 Do you remember stamps.com? I have such a clear memory of 70 00:03:23,840 --> 00:03:27,840 the commercials airing on TV. That was Jim, very cool. 71 00:03:28,280 --> 00:03:31,320 And from there, he made his way into private equity and the 72 00:03:31,360 --> 00:03:33,480 energy business. And just going through his 73 00:03:33,480 --> 00:03:36,160 LinkedIn, his background is deep. 74 00:03:36,160 --> 00:03:38,320 He is involved in many companies. 75 00:03:38,360 --> 00:03:40,880 He sits on the board of many companies that he invests in. 76 00:03:41,240 --> 00:03:44,560 He's seen some big deals. He's on the board of Carbon 77 00:03:44,560 --> 00:03:47,600 Engineering, which was sold to Occidental Petroleum, which we 78 00:03:47,600 --> 00:03:50,760 talked about in the episode. We refer to it as Oxy. 79 00:03:51,000 --> 00:03:54,400 He was also the founder, CEO and board member of 1.5, which also 80 00:03:54,400 --> 00:03:57,880 sold to Oxy. He founded Avnos, which is a big 81 00:03:57,880 --> 00:04:00,560 direct air capture company that also produces water. 82 00:04:00,560 --> 00:04:01,920 Carbon Ridge. I don't know if you've been 83 00:04:01,920 --> 00:04:06,000 seeing what's happening with decarbonizing maritime vessels. 84 00:04:06,200 --> 00:04:09,680 So much of it takes place inside of his company, Rasheen Capital 85 00:04:09,680 --> 00:04:13,280 Management LLC Rachina invest in these companies, but it's also 86 00:04:13,280 --> 00:04:17,240 involved in identifying early talent and proofing out some of 87 00:04:17,240 --> 00:04:18,920 the ideas. And just it's almost like a 88 00:04:18,920 --> 00:04:21,560 little incubator, a little venture studio. 89 00:04:21,920 --> 00:04:24,880 It's higher touch than a lot of what you see elsewhere in 90 00:04:24,880 --> 00:04:27,040 venture. We talked about what it's like 91 00:04:27,040 --> 00:04:30,080 to exit several companies in carbon removal and to be 92 00:04:30,080 --> 00:04:32,960 involved in those processes. There's not actually that many 93 00:04:32,960 --> 00:04:35,280 examples of companies that have exited. 94 00:04:35,600 --> 00:04:38,760 One of the other big deals just happened was Holocene also sold 95 00:04:38,760 --> 00:04:41,480 to Oxy. And if you're sensing a pattern 96 00:04:41,480 --> 00:04:45,280 here, the specific pattern is that Oxy is is buying direct air 97 00:04:45,280 --> 00:04:47,920 capture companies. The other pattern is that oil 98 00:04:47,920 --> 00:04:51,200 and gas companies will likely be the exit route for at least some 99 00:04:51,200 --> 00:04:53,600 sets of companies within carbon removal. 100 00:04:53,960 --> 00:04:55,400 This is a trend to keep your eye on. 101 00:04:55,880 --> 00:04:57,120 It depends on how you view it too. 102 00:04:57,320 --> 00:04:59,360 This could be a really great thing because it allows the 103 00:04:59,360 --> 00:05:00,840 industry to run things in reverse. 104 00:05:01,040 --> 00:05:03,800 If you're skeptical of it, it's because they are greenwashing 105 00:05:03,800 --> 00:05:05,000 and you shouldn't trust them at all. 106 00:05:05,400 --> 00:05:07,880 I will leave it up to you to to make up your mind on that. 107 00:05:08,440 --> 00:05:10,600 So Jim has a lot of experience here. 108 00:05:10,680 --> 00:05:13,920 He has great advice for companies that are project 109 00:05:13,920 --> 00:05:18,200 developers within carbon removal who are facing turbulent times. 110 00:05:18,200 --> 00:05:22,320 Listen to Jim, I hope you enjoy. Thank you so much for your time 111 00:05:22,400 --> 00:05:32,000 and here is your show. I'm happy to have you here. 112 00:05:32,360 --> 00:05:36,480 You have the distinction of having two full exits in carbon 113 00:05:36,480 --> 00:05:39,680 removal, which is there anyone else that has that record? 114 00:05:39,680 --> 00:05:42,320 Is there anyone else can that can rival your status in that 115 00:05:42,320 --> 00:05:46,080 way I. Don't know I we don't spend the 116 00:05:46,080 --> 00:05:49,280 time and time bringing it out, but I think it's fairly unusual. 117 00:05:50,080 --> 00:05:52,840 Well, I'll put you this way I don't no one's ever told me that 118 00:05:52,840 --> 00:05:55,240 they've sold 2 diseases in in paranoid. 119 00:05:55,400 --> 00:05:59,840 The guy's housing just had an exit, so Keaton has got got one 120 00:05:59,840 --> 00:06:02,960 under his belt. But I but I think, and I'm super 121 00:06:02,960 --> 00:06:06,960 excited for him, but I think at this point, yeah, too, is the is 122 00:06:06,960 --> 00:06:10,080 the the limit? Keaton's coming for you. 123 00:06:10,280 --> 00:06:12,200 I think he's going to take you down, Jim. 124 00:06:12,560 --> 00:06:14,720 That's I, I look forward to that. 125 00:06:14,760 --> 00:06:16,120 I very much look forward to that. 126 00:06:17,240 --> 00:06:20,120 What's the process like of exiting a company in climate 127 00:06:20,120 --> 00:06:23,000 tech or carbon removal? It's fairly rare as we've 128 00:06:23,000 --> 00:06:27,640 mentioned, and I think everyone is looking forward to what their 129 00:06:27,640 --> 00:06:31,440 company statuses will be like in this new administration in the 130 00:06:31,440 --> 00:06:33,520 future. Beyond it, what's it even like 131 00:06:33,520 --> 00:06:35,760 to set a company up for acquisition like that I. 132 00:06:37,560 --> 00:06:40,640 Don't think it's all that different from any company that 133 00:06:40,640 --> 00:06:43,480 you're building, you know, respecting the health planet or 134 00:06:43,920 --> 00:06:47,360 any business. It's fundamentally being able to 135 00:06:48,760 --> 00:06:52,000 position the company in a way that buyer believes that 136 00:06:52,000 --> 00:06:53,760 ultimately under there, you know, I mean, they're single 137 00:06:53,760 --> 00:06:55,240 Ledger ownership. Things are going to continue to 138 00:06:55,240 --> 00:06:57,400 grow. And I think that probably the 139 00:06:57,400 --> 00:06:59,960 biggest difference is because climbing is emerging. 140 00:07:00,240 --> 00:07:03,320 There aren't as many sort of established cash flow stories as 141 00:07:03,320 --> 00:07:05,000 you as you likely see in other markets. 142 00:07:05,360 --> 00:07:09,440 So a big part of understanding and, and you know, when 143 00:07:09,440 --> 00:07:12,840 something acquires is kind of what's the cost of capital and 144 00:07:12,840 --> 00:07:15,520 what is that technology development side to look, you 145 00:07:15,520 --> 00:07:18,280 know, from today forward. And it thinks you have to spend 146 00:07:18,280 --> 00:07:20,840 a lot of time really thinking about how you're going to drive 147 00:07:20,840 --> 00:07:24,680 down cost and how that's going to impact the overall growth of 148 00:07:24,680 --> 00:07:28,400 the business because there's still a lot of cost reductions 149 00:07:28,400 --> 00:07:31,760 required in these markets. So successful acquisitions 150 00:07:31,760 --> 00:07:35,440 usually are predicated on a lot of development to date, followed 151 00:07:35,440 --> 00:07:39,320 by a real credible story on how cost is going to get reduced 152 00:07:39,320 --> 00:07:41,760 over time. With regard to Oxy, who bought 153 00:07:41,760 --> 00:07:45,360 1.5 and Carbon Engineering at least partially from you and 154 00:07:45,360 --> 00:07:49,760 then also Holocene, what goes into an M&A emerges an 155 00:07:49,760 --> 00:07:52,000 acquisition strategy for an oil and gas major. 156 00:07:52,000 --> 00:07:55,200 How did they decide of all the companies in direct air capture 157 00:07:55,200 --> 00:07:56,840 that they want these particular ones? 158 00:07:56,840 --> 00:07:59,280 How does that process even work? I think only once you get to a 159 00:07:59,280 --> 00:08:01,840 certain level of success as an entrepreneur do you even base 160 00:08:01,840 --> 00:08:04,760 that decision. So I think that the the way to 161 00:08:05,440 --> 00:08:09,080 successful oil and gas companies are are prosecuting is that 162 00:08:09,080 --> 00:08:13,200 they're first taking a very broad look at the landscape with 163 00:08:13,200 --> 00:08:15,840 respect to which technologies they think are most likely to 164 00:08:15,840 --> 00:08:20,040 work and which technologies are most likely to work in, in the 165 00:08:20,040 --> 00:08:22,920 regions and areas and climates in which they operate. 166 00:08:22,920 --> 00:08:25,720 So if you're say a Canadian oil and gas company, you have a 167 00:08:25,720 --> 00:08:28,880 different set of criteria for where you might put a DAC plant 168 00:08:28,880 --> 00:08:31,440 in Camden because the operating environment is different than 169 00:08:31,440 --> 00:08:33,400 say if you're only in the Permian Basin. 170 00:08:34,280 --> 00:08:37,679 So I think what you see is the good companies are do a very 171 00:08:37,679 --> 00:08:40,880 judicious look at all of the available technologies and then 172 00:08:40,880 --> 00:08:43,880 they usually select one. In case of Oxendenal, I think 173 00:08:43,880 --> 00:08:47,240 that they they've been clear and and Vicki has said that they 174 00:08:47,240 --> 00:08:49,520 believe in a liquid based Orbin approach. 175 00:08:50,040 --> 00:08:53,240 There are solid servants, there are monstration absorbents, 176 00:08:53,240 --> 00:08:55,160 there are electrochemical processes. 177 00:08:55,960 --> 00:08:58,520 So they make their own decision about which one they think is 178 00:08:58,520 --> 00:09:02,120 most likely to to operate well and within the context of their 179 00:09:02,560 --> 00:09:05,280 operating envelope. Then I think once they make a 180 00:09:05,280 --> 00:09:10,840 platform acquisition on what you then see is a lot of focus on 181 00:09:11,080 --> 00:09:14,920 process flows and and breaking down those process flows to see 182 00:09:14,920 --> 00:09:18,480 where individual technologies can be purchased to increase the 183 00:09:18,480 --> 00:09:21,520 efficacy or the constant action across this point sheet. 184 00:09:21,920 --> 00:09:24,920 And frankly that's it. If you look at Coliseum, that's 185 00:09:24,920 --> 00:09:26,920 very clear. It's when oxygen and then is it, 186 00:09:26,920 --> 00:09:31,080 they said, look, we have a liquid Sorby and branch and 187 00:09:31,080 --> 00:09:32,720 we're pursuing it. We're driving costs out of it. 188 00:09:33,800 --> 00:09:37,840 The, the, the technical approach that Halsey was, was utilizing. 189 00:09:38,320 --> 00:09:42,000 I think I, I believe that Oxy believes that that will help 190 00:09:42,000 --> 00:09:45,200 drive down their total cost of of kind of caching and that's 191 00:09:45,200 --> 00:09:48,640 why they did it. So you see acquisitions first at 192 00:09:48,640 --> 00:09:52,240 platform level, then followed by tuck in and acquisitions that 193 00:09:52,240 --> 00:09:56,440 drive on particular pieces of their of their system level 194 00:09:56,480 --> 00:10:00,240 engineering. Does this surprise you that we 195 00:10:00,240 --> 00:10:03,320 haven't seen more acquisition deals at this stage of maturity 196 00:10:03,320 --> 00:10:07,880 for carbon removal? No, actually I've, I believe 197 00:10:07,880 --> 00:10:11,320 that there will, but, but that said, I believe that there's 198 00:10:11,320 --> 00:10:18,680 going to be a huge wave of them coming and say late 262728. 199 00:10:18,920 --> 00:10:23,320 And that's because when you look at the progression, the the 200 00:10:23,320 --> 00:10:27,200 technology readiness or the TRL levels of the guys who actually 201 00:10:27,200 --> 00:10:30,680 have money, who are progressing through, most of them are going 202 00:10:30,680 --> 00:10:35,520 to be in a situation that around late 26, early 2728, they're 203 00:10:35,520 --> 00:10:38,400 going to have commercial level on products ready to go. 204 00:10:38,560 --> 00:10:42,200 And I believe a bunch of oil and gas and and frankly large 205 00:10:42,200 --> 00:10:44,160 manufacturing players are depriving and shut buying 206 00:10:44,160 --> 00:10:46,360 things. And so it's just that they're 207 00:10:46,360 --> 00:10:50,160 not quite there anymore. I'm wondering how many carbon 208 00:10:50,160 --> 00:10:52,080 removal companies might be able to make it that long. 209 00:10:52,080 --> 00:10:53,720 I think if they have big off takes that are able to be 210 00:10:53,720 --> 00:10:56,280 financed they'll be OK, but the buying environment by then could 211 00:10:56,280 --> 00:10:57,600 be very different. I. 212 00:10:57,760 --> 00:11:00,960 I. Think that one of the major 213 00:11:00,960 --> 00:11:05,400 questions that every board and every CEO that's in the director 214 00:11:05,400 --> 00:11:08,360 of capture business is asking themselves right now is do I 215 00:11:08,360 --> 00:11:13,560 have enough money on my balance sheet today to get out to the 216 00:11:13,560 --> 00:11:17,200 2627 time frame. And I, I will tell you, Ross, I 217 00:11:17,200 --> 00:11:20,600 have very high conviction that, you know, I think we were 218 00:11:20,600 --> 00:11:23,280 keeping track of somewhere north of 150 companies have been 219 00:11:23,280 --> 00:11:26,560 funded in DAC. I think that the die off rate 220 00:11:26,560 --> 00:11:30,000 between here and 26 is probably 80 to 85%. 221 00:11:31,120 --> 00:11:37,000 I think a lot of companies are going under and that's, I mean, 222 00:11:37,000 --> 00:11:39,360 that's part of the natural venture capital cycle where a 223 00:11:39,360 --> 00:11:43,320 lot of things fail. It's, it's being really 224 00:11:43,320 --> 00:11:48,200 exacerbated, I think by a lot of, from the chilling effect 225 00:11:48,200 --> 00:11:52,400 right now in the US on, you know, from, from a political 226 00:11:52,400 --> 00:11:53,880 level. I think a lot of people are 227 00:11:54,280 --> 00:11:56,840 looking at it and saying, OK, if this isn't working right now or 228 00:11:56,840 --> 00:11:59,800 I don't have ample capital to get myself through the next 24 229 00:11:59,800 --> 00:12:02,240 months, maybe I'm just not going to get any more money. 230 00:12:03,200 --> 00:12:07,560 Which is I think for people who are focused on which 231 00:12:07,560 --> 00:12:09,720 technologies they care about, maybe a terrific buying 232 00:12:09,720 --> 00:12:13,920 opportunity for for folks on the long side of the equation. 233 00:12:13,920 --> 00:12:17,560 And on the other side, it may be a situation where stuff that was 234 00:12:17,560 --> 00:12:20,720 working is just not going to happen. 235 00:12:21,120 --> 00:12:22,800 You know it's going to it's going to die in a month. 236 00:12:23,280 --> 00:12:26,160 Sounds like a lot of the die off rate is just a response to 237 00:12:26,160 --> 00:12:30,120 macroeconomic conditions that are beyond the control of these 238 00:12:30,120 --> 00:12:32,080 individual technology developers. 239 00:12:32,080 --> 00:12:34,920 They might have great technology, they might not have 240 00:12:34,920 --> 00:12:38,800 an off taken hand or or be able to survive and that puts them in 241 00:12:39,240 --> 00:12:43,320 a very dependent position. It almost seems very unfair to 242 00:12:43,320 --> 00:12:47,560 be at the whims of such global world historical moments that 243 00:12:47,560 --> 00:12:50,120 maybe are responsible for your business success or failure. 244 00:12:50,160 --> 00:12:52,880 I feel like a lot of this is luck or timing in a way that 245 00:12:53,600 --> 00:12:55,400 people that are successful entrepreneurs sometimes 246 00:12:55,400 --> 00:12:57,640 highlight that luck played a big role in their success. 247 00:12:57,640 --> 00:12:59,840 And I think we're seeing that a little bit now here too. 248 00:13:00,520 --> 00:13:02,480 Without question. Without question. 249 00:13:02,560 --> 00:13:07,920 I mean, I you're, I think it is so any static visit, this can be 250 00:13:07,920 --> 00:13:09,800 a fearful situation because you're trying to think and it's 251 00:13:09,800 --> 00:13:12,280 brand, you know you and create something that's never been done 252 00:13:12,320 --> 00:13:16,320 before. I think that there are, there 253 00:13:16,320 --> 00:13:21,400 will be plenty of people in this sector who in retrospect, you 254 00:13:21,400 --> 00:13:23,520 know, had great technology and just got treated unfairly 255 00:13:23,520 --> 00:13:24,960 because of the winds in their capital markets. 256 00:13:24,960 --> 00:13:27,880 And then there will be some folks who survive and make it 257 00:13:27,880 --> 00:13:31,360 through with maybe not the best technology and ultimately get to 258 00:13:31,360 --> 00:13:34,360 an exit or becomes part of being a part of a larger entity. 259 00:13:34,920 --> 00:13:38,440 I think, you know, having been to business since the early in 260 00:13:38,440 --> 00:13:41,440 the 2000s, I watched this cycle in software where you know, over 261 00:13:41,440 --> 00:13:45,280 and over again, people with inferior technology solutions 1 262 00:13:45,600 --> 00:13:48,080 because they either got themselves into a large, well 263 00:13:48,080 --> 00:13:51,280 capitalized company or the basically had better financial 264 00:13:51,280 --> 00:13:53,520 backing. So again, I didn't think this is 265 00:13:53,520 --> 00:13:59,040 something that's discreet and we're focused on on climate. 266 00:13:59,440 --> 00:14:02,680 I think it's just the way the natural thing works and and 267 00:14:02,680 --> 00:14:06,360 good, but good entrepreneurs, I think recognize those cycles, 268 00:14:06,840 --> 00:14:10,160 prepare themselves for the ups and downs that invariably come. 269 00:14:10,680 --> 00:14:14,080 And so I think it's both luck that it's also skilled in the 270 00:14:14,080 --> 00:14:17,160 sense that one of my favorite churches is business early with 271 00:14:17,160 --> 00:14:19,360 my dad's kids. Just because you're paranoid 272 00:14:19,360 --> 00:14:23,440 doesn't mean they're not out to get you and and you're running 273 00:14:23,440 --> 00:14:29,160 paranoid in climate about the fact that the capital palpation 274 00:14:29,160 --> 00:14:33,200 swings can be pretty severe. Is is the hallmark and a good 275 00:14:33,200 --> 00:14:37,160 entrepreneur. If they have to stay alive 276 00:14:37,160 --> 00:14:40,560 until, you know, second-half of 2026 for some of these deals or 277 00:14:40,560 --> 00:14:42,960 maybe even beyond that, I imagine they're going to be 278 00:14:43,000 --> 00:14:45,240 cutting costs, going into cockroach mode, just trying to 279 00:14:45,240 --> 00:14:47,120 stay alive. And the old line for this is 280 00:14:47,120 --> 00:14:50,400 that companies don't get sold, they get bought, right? 281 00:14:50,560 --> 00:14:52,160 And I imagine it's going to be a buyer's market. 282 00:14:52,160 --> 00:14:55,760 If you expect 80 to 85% of companies to fold under 283 00:14:55,760 --> 00:14:58,480 themselves, that sounds like a buyer's market to me. 284 00:14:59,880 --> 00:15:03,800 I think it's a buyer's market me and here's why. 285 00:15:04,760 --> 00:15:08,880 Because there aren't that many energy companies to to buy. 286 00:15:08,880 --> 00:15:14,280 So, you know, look, let's say as a as a fun exercise, out of 150, 287 00:15:14,280 --> 00:15:18,400 let's say 20% survive, right? So you got 30 companies that 288 00:15:18,400 --> 00:15:21,800 come out the other side, 2020 to 32 companies, right? 289 00:15:22,280 --> 00:15:28,040 Well, there's only, you know, I mean 50 or 20 major oil and gas 290 00:15:28,040 --> 00:15:30,800 companies slowly they're all going to want to own their own 291 00:15:30,800 --> 00:15:34,000 technology and they're all going to want to, you know, controller 292 00:15:34,000 --> 00:15:38,560 in Destiny, if you've got one of the better answers, I actually 293 00:15:38,560 --> 00:15:42,560 think all you really need is 2 people compete if there's act, 294 00:15:42,560 --> 00:15:44,480 if acquisition is sort of in the offing. 295 00:15:44,760 --> 00:15:48,520 So I'm not totally sure that I think it might be a buyer's 296 00:15:48,520 --> 00:15:51,120 market if you don't, if you're not one of the winners. 297 00:15:51,360 --> 00:15:54,320 But I think if you're one of the winners, it feels a lot like a 298 00:15:54,320 --> 00:15:57,720 winner take most situation to me. 299 00:15:57,800 --> 00:16:01,000 For the folks who make it, make it out into the 2627 point 300 00:16:01,000 --> 00:16:03,400 frame. Do you have any advice for 301 00:16:03,400 --> 00:16:08,080 companies that might hear this podcast, be concerned with these 302 00:16:08,080 --> 00:16:10,720 predictions and want to set themselves up for future success 303 00:16:10,720 --> 00:16:14,680 for acquisition? Couple pieces of advice. 304 00:16:14,680 --> 00:16:18,440 The first thing is right, we've seen this. 305 00:16:18,440 --> 00:16:22,920 We saw this a lot last year. There are times in markets where 306 00:16:22,920 --> 00:16:27,160 raising capital like that, definitions of successes don't 307 00:16:27,160 --> 00:16:30,160 move backward. There were a lot of companies 308 00:16:30,160 --> 00:16:32,640 that we saw last year that were like, well, I had a huge step up 309 00:16:32,640 --> 00:16:34,760 in the last round. I was doing a huge step up now. 310 00:16:35,400 --> 00:16:38,560 And the and then the answer I think to a lot of people is that 311 00:16:38,600 --> 00:16:42,040 you should take money to survive sometimes. 312 00:16:42,640 --> 00:16:44,600 And, and I think we're in an environment like that. 313 00:16:44,600 --> 00:16:46,320 We're just, you know, doing a flat round. 314 00:16:46,480 --> 00:16:48,480 It's not a bad thing because it means you're going to be around 315 00:16:48,480 --> 00:16:50,840 and a lot of other people don't make it across the chasm. 316 00:16:51,080 --> 00:16:56,640 That's one and and two is I think define very carefully how 317 00:16:56,880 --> 00:17:00,760 you're, you're sort of chunking through your milestones and make 318 00:17:00,760 --> 00:17:04,240 sure that the milestone that you've, you know, defined 319 00:17:04,240 --> 00:17:07,960 yourself are ones that people outside your company care about, 320 00:17:09,280 --> 00:17:11,520 right? Because we've seen over and over 321 00:17:11,520 --> 00:17:14,880 again situations where people sort of define metrics and and 322 00:17:14,920 --> 00:17:18,280 then they hit them and then they say, but no one cares. 323 00:17:18,760 --> 00:17:21,400 And they're like, well, that's because you didn't ask anyone. 324 00:17:21,800 --> 00:17:24,160 So I think it's if you're, if you're thinking about, oh, well, 325 00:17:24,160 --> 00:17:25,880 maybe this is ultimately going to end up in the hands of 326 00:17:25,880 --> 00:17:28,920 someone just sort of further up the fleet chain from me, then 327 00:17:28,920 --> 00:17:32,040 you then it accrues you to spend some time thinking about what's 328 00:17:32,040 --> 00:17:34,320 their process? How did they think about things? 329 00:17:34,800 --> 00:17:39,520 And don't try to overlay your preconceived notions about what 330 00:17:39,520 --> 00:17:43,800 value is. Go listen to the buyers and you 331 00:17:43,840 --> 00:17:48,560 know and very concretely, large oil and gas companies operate on 332 00:17:48,560 --> 00:17:52,640 stage dates and you should it behooves you to go learn how 333 00:17:52,640 --> 00:17:54,240 they run their stage gate processes. 334 00:17:55,760 --> 00:17:57,600 Can you tell us a little bit more about how that works? 335 00:17:57,600 --> 00:17:59,560 I imagine that's a new term for many people listening. 336 00:18:01,120 --> 00:18:04,800 Stage gate is, is really just a process when you're doing a very 337 00:18:04,800 --> 00:18:08,640 large end of your project that basically you set up a series of 338 00:18:08,640 --> 00:18:10,800 milestones. And then when you get to that, 339 00:18:11,040 --> 00:18:15,760 that stage gate, you sit down as a group and you look at all of 340 00:18:15,760 --> 00:18:18,120 the various things like generally speaking, it's, it's 341 00:18:18,160 --> 00:18:22,640 commercial, technical, regulatory and financial. 342 00:18:23,560 --> 00:18:27,720 And, and you say, how do we reach the defined stage gate to 343 00:18:27,720 --> 00:18:30,520 move beyond this? So like, you know, one of the 344 00:18:30,520 --> 00:18:33,400 stage gates that you offer now, it's just basically is it, you 345 00:18:33,400 --> 00:18:37,680 know, do you have a, a commercially viable price for, 346 00:18:37,680 --> 00:18:39,240 for what you're about to do, right? 347 00:18:39,880 --> 00:18:42,680 Second one often is you can, you, can you get it financed 348 00:18:42,840 --> 00:18:46,320 right? So oftentimes when you reach a 349 00:18:46,320 --> 00:18:49,200 stage gate and then oftentimes what happens is you with your 350 00:18:49,200 --> 00:18:52,320 stage gate is they start with USA, what's the pricing on the 351 00:18:52,320 --> 00:18:55,480 project? And the first gate gate is ±50%. 352 00:18:55,840 --> 00:18:59,840 The second stage gate when we cost or -25% and the third one 353 00:18:59,840 --> 00:19:03,720 is ±10. And, and so when you move 354 00:19:03,720 --> 00:19:06,840 through stage gates and every corporation has their own stage 355 00:19:06,840 --> 00:19:10,600 gate process. So if you're thinking about how 356 00:19:10,600 --> 00:19:14,840 am I willing to fit into an acquirer's potential, you know, 357 00:19:14,840 --> 00:19:18,440 business reps us, educating yourself on state base is really 358 00:19:18,440 --> 00:19:21,880 important. With regard to. 359 00:19:21,880 --> 00:19:25,040 Flat and down rounds. Do you think entrepreneurs and 360 00:19:25,040 --> 00:19:27,920 founders should feel the amount of shame that they typically 361 00:19:27,920 --> 00:19:30,600 feel around those events? I know it's good to stay alive, 362 00:19:30,600 --> 00:19:34,960 but often times it they don't get announced as loudly as maybe 363 00:19:34,960 --> 00:19:36,280 they should. Even just staying alive though, 364 00:19:36,280 --> 00:19:39,600 is a success, especially in a volatile, strange market that is 365 00:19:39,600 --> 00:19:41,320 still very undefined like ours is. 366 00:19:42,320 --> 00:19:43,520 Oh, yeah. No, I don't. 367 00:19:43,520 --> 00:19:47,960 I don't think that particularly hardware markets because so much 368 00:19:47,960 --> 00:19:52,360 of hardware can be driven and the cost of the hardware when 369 00:19:52,360 --> 00:19:54,600 they deliver in the hardware because, you know, supply chains 370 00:19:54,600 --> 00:19:56,720 are global. There's a lot of, I mean, 371 00:19:56,720 --> 00:19:59,040 there's currency movements, there's tariffs, there's all 372 00:19:59,040 --> 00:20:02,280 sorts of things that can. That they're sort of exogenous 373 00:20:02,280 --> 00:20:04,640 to your activities that can make your life hard. 374 00:20:04,920 --> 00:20:10,040 So I think what we try to counsel everybody that that we 375 00:20:10,040 --> 00:20:13,040 work with is like, just be conservative in terms of how 376 00:20:13,040 --> 00:20:15,360 much money and how much time they think it's going to take. 377 00:20:15,840 --> 00:20:17,920 Because you can't really control. 378 00:20:17,920 --> 00:20:21,880 Like, for instance, you can't control say that, you know, the 379 00:20:22,000 --> 00:20:25,120 Trump administration decides they're going to put 145 percent 380 00:20:25,120 --> 00:20:26,800 tariff on something. It's it's not within your 381 00:20:26,800 --> 00:20:29,000 control. What is it within your control 382 00:20:29,000 --> 00:20:32,200 is to anticipate that there might be a significant price 383 00:20:32,200 --> 00:20:35,640 increase while you're trying to build your first unit right now. 384 00:20:35,800 --> 00:20:40,520 Can you can you pick 145? No, but you could make the 385 00:20:40,520 --> 00:20:44,120 assumption of hey, in a reasonable market or in, you 386 00:20:44,120 --> 00:20:47,840 know, low turbulent market and low volatility market, it's 387 00:20:47,840 --> 00:20:51,360 going to be $100 to build something and plan for it might 388 00:20:51,360 --> 00:20:56,080 be 125, right? But no, I, I don't Shane. 389 00:20:58,400 --> 00:21:01,200 Shane is a, is a is AI think I've certainly valueless 390 00:21:01,200 --> 00:21:03,880 emotion, which what involves clean tech, which is there are 391 00:21:03,880 --> 00:21:06,880 just so many moving parts that you just need to stay focused 392 00:21:06,880 --> 00:21:08,200 on. Like, you know, what can I 393 00:21:08,200 --> 00:21:09,720 control? What can I not control? 394 00:21:09,720 --> 00:21:11,000 And how do I keep moving forward? 395 00:21:12,640 --> 00:21:15,800 One of the long running jokes as a founder is that you know when 396 00:21:15,800 --> 00:21:19,160 times are good you're bored and V CS backing and you will say we 397 00:21:19,160 --> 00:21:22,120 don't care about profitability, just grow as fast as you can and 398 00:21:22,120 --> 00:21:25,200 then exogenous forces will bear down upon you. 399 00:21:25,480 --> 00:21:28,000 Interest rates will change and they'll say cut expenses. 400 00:21:28,000 --> 00:21:30,520 It's all about profitability. Like how fast can you can you 401 00:21:30,520 --> 00:21:32,640 make this work? And getting jolted around like 402 00:21:32,640 --> 00:21:34,800 that is a very common experience. 403 00:21:34,800 --> 00:21:37,520 It is out of your control and that you might try to be 404 00:21:37,520 --> 00:21:40,320 expanding as fast as possible, then get caught out and then 405 00:21:40,320 --> 00:21:42,040 almost get in trouble for doing so. 406 00:21:42,040 --> 00:21:44,080 I think it's really tough to be in a spot like that. 407 00:21:45,440 --> 00:21:48,720 I agreed. I mean, but that's, I mean, I 408 00:21:48,720 --> 00:21:51,280 agree that that happens. I don't agree that that's 409 00:21:51,280 --> 00:21:54,600 necessarily good board management for people acting the 410 00:21:54,600 --> 00:21:59,120 way that they should. Because when you get into a 411 00:21:59,120 --> 00:22:02,880 climate investment and you know, talk about this in the past, one 412 00:22:02,880 --> 00:22:05,920 of the things that you really have to do is understand that 413 00:22:05,920 --> 00:22:08,640 you're involved in a very long time horizon gain. 414 00:22:09,240 --> 00:22:13,720 It means this is not, you know, I, I've taken 1,000,000 bucks 415 00:22:13,720 --> 00:22:16,000 and I get up a product I'm the Internet on AWS and I'm, you 416 00:22:16,000 --> 00:22:19,160 know, and it's up there running and something wants to acquire 417 00:22:19,160 --> 00:22:21,160 in 18 months. Like it's just not a thing. 418 00:22:21,520 --> 00:22:27,240 And so when you invest in a client or however play, you need 419 00:22:27,240 --> 00:22:29,640 to have your head around maybe 7 to 10 years. 420 00:22:30,080 --> 00:22:34,080 And during the seven to 10 year period, it's almost a guarantee 421 00:22:34,360 --> 00:22:37,240 that there will be one of two cycles as you've described, 422 00:22:37,840 --> 00:22:40,080 right. And so the idea, well, all of a 423 00:22:40,080 --> 00:22:43,000 sudden everything is moving the other direction while you're 424 00:22:43,000 --> 00:22:47,840 trying to prosecute a, a sentence 10 year plan is not 425 00:22:47,920 --> 00:22:50,760 realistic. And, and in so far as your board 426 00:22:50,760 --> 00:22:53,160 or your investors are sort of all of a sudden lighting up to 427 00:22:53,160 --> 00:22:56,480 that, that's as much on them as it is on the entrepreneur. 428 00:22:57,760 --> 00:23:00,280 Rasheen has an interesting business model. 429 00:23:00,280 --> 00:23:04,280 To me it seems like you have founded or Co founded several 430 00:23:04,280 --> 00:23:05,800 companies. It almost seems like you 431 00:23:05,840 --> 00:23:10,040 incubate talent and then you send off these, these young or 432 00:23:10,160 --> 00:23:12,360 not always so young entrepreneurs off on their own 433 00:23:12,360 --> 00:23:15,040 company journeys here. How do you think about this? 434 00:23:15,120 --> 00:23:17,240 Why do you do it in this way? It strikes me as somewhat 435 00:23:17,240 --> 00:23:19,520 unusual. Maybe it's not, but why do 436 00:23:19,520 --> 00:23:24,280 business in this way? Three, well three reasons. 437 00:23:24,840 --> 00:23:28,160 Kirsten is Jet and I met have affairs. 438 00:23:28,640 --> 00:23:31,200 I always say, you know, that people used to ask what do you 439 00:23:31,200 --> 00:23:32,800 do? I say, well, I'm, I'm an 440 00:23:32,800 --> 00:23:35,480 entrepreneur and I'm an operator with money. 441 00:23:35,960 --> 00:23:38,600 I'm not a venture capitalist. I, I actually, I come from the 442 00:23:38,600 --> 00:23:42,920 operating side and I firmly believe that operating and and 443 00:23:42,920 --> 00:23:46,520 good operating operators are the people who, who drive things. 444 00:23:46,840 --> 00:23:52,240 Money is not money is a, it's a true, but it's necessary but 445 00:23:52,240 --> 00:23:54,800 insufficient. So I think you start from the 446 00:23:54,800 --> 00:23:56,520 operator side. And the second reason we do this 447 00:23:56,520 --> 00:23:59,440 is that in looking back at all of the investments we made at 448 00:23:59,440 --> 00:24:03,120 USRG, which is the first private equity firm at United, one of 449 00:24:03,120 --> 00:24:05,920 the things that emerged was in almost in every case where we've 450 00:24:05,920 --> 00:24:08,880 done really well, we've been involved very early. 451 00:24:08,960 --> 00:24:12,040 Sometimes we come up with the idea of ourselves, other times 452 00:24:12,040 --> 00:24:15,480 kind of, you know, founder to come in and we'd work with them 453 00:24:15,480 --> 00:24:20,120 surely from inception. And and so looking back on on 454 00:24:20,160 --> 00:24:23,080 check on track record, it became apparent that we're better early 455 00:24:23,080 --> 00:24:25,240 stage people that we are late stage project guys. 456 00:24:25,840 --> 00:24:30,200 Now I I know how to do proper planes, but I realized in my 50s 457 00:24:30,200 --> 00:24:33,760 that I should focus on what I'm going to do, which is starting 458 00:24:33,760 --> 00:24:35,840 voyage. And then and the third thing is 459 00:24:35,840 --> 00:24:39,680 that having built a publicly traded software company early in 460 00:24:39,680 --> 00:24:43,000 my career and having been in the energy business the rest of the 461 00:24:43,000 --> 00:24:47,640 time, the amount of attention and time that's required to be a 462 00:24:47,640 --> 00:24:51,240 hardware company or something that is in the, we'll call it 463 00:24:51,240 --> 00:24:54,400 the climbing space relative to a sound care company. 464 00:24:54,720 --> 00:24:56,760 It's just it's ordering magnitude more. 465 00:24:56,880 --> 00:25:01,240 So you can't have like a spray and prey, which is thinking of 466 00:25:01,480 --> 00:25:04,920 put, you know, 150 investments out and then just start seeing 467 00:25:04,920 --> 00:25:07,040 the chain survive, which does work. 468 00:25:07,080 --> 00:25:10,480 In fact, Germany and start actually a lot of guys have done 469 00:25:10,480 --> 00:25:13,320 that. That does not work in hangar. 470 00:25:13,600 --> 00:25:19,320 And so her model is go in early, do a few things and then working 471 00:25:19,320 --> 00:25:24,280 very hard on them until they started to to really catch. 472 00:25:24,440 --> 00:25:27,440 So get give air under their ways or whatever an LV you want to 473 00:25:27,440 --> 00:25:29,480 use. And then after that we, we tend 474 00:25:29,480 --> 00:25:32,680 to that back and don't play such an activist role. 475 00:25:32,960 --> 00:25:35,560 But it means that we can only do, you know, two or three 476 00:25:35,560 --> 00:25:40,720 things a year, but we really focus on it, which means I'm not 477 00:25:40,720 --> 00:25:44,760 running a $10 billion fund because I can't. 478 00:25:45,160 --> 00:25:48,760 My operating leverage is, you know, putting up 150 bets a year 479 00:25:48,760 --> 00:25:52,240 is not, it's just not. We have not found that it works. 480 00:25:54,560 --> 00:25:57,560 Does your experience lead you to think that the capital 481 00:25:57,560 --> 00:26:01,200 allocation model for climate tech and carbon removal is also 482 00:26:01,200 --> 00:26:03,640 insufficient in some way? This maybe isn't purely 483 00:26:03,640 --> 00:26:07,040 idiosyncratic to you personally. Maybe it's a sign of a larger 484 00:26:07,040 --> 00:26:10,040 dysfunction or inappropriate application. 485 00:26:11,160 --> 00:26:13,160 Yeah. Actually in patch, it's really 486 00:26:13,280 --> 00:26:20,440 there's a perfect spegway one of the things that we have found at 487 00:26:20,440 --> 00:26:23,360 Rashidi and and I that I'm hoping that the world will come 488 00:26:23,360 --> 00:26:25,400 out. But at least my, my view on this 489 00:26:25,400 --> 00:26:30,480 is that there's probably a better capital model than A2 in 490 00:26:30,480 --> 00:26:33,920 20 closed down 10 year fund for climate. 491 00:26:33,960 --> 00:26:37,520 And and the reason that that's the case is that most 492 00:26:37,520 --> 00:26:41,240 investments take much longer than a typical software or life 493 00:26:41,240 --> 00:26:42,600 science. There may be maybe some life 494 00:26:42,600 --> 00:26:46,000 sciences for it, but they tend to be 7 to 10 years. 495 00:26:46,000 --> 00:26:49,320 Every really successful our company we've had has been at 496 00:26:49,320 --> 00:26:52,880 least seven years found in the making, which is a long, I mean, 497 00:26:53,520 --> 00:26:57,560 it's an example coming year in this started in 2009 and the 498 00:26:57,560 --> 00:27:01,960 exit was in 2021. Wow, right. 499 00:27:01,960 --> 00:27:05,680 So then that's the biggest and and there were many years where 500 00:27:05,680 --> 00:27:08,680 David and the guys were and in fact, they were backed by Bill 501 00:27:08,680 --> 00:27:12,280 Gates, who really has no time to rise if you if you stop in 502 00:27:12,280 --> 00:27:16,160 Piccadanga and what what that allows him to do or people like 503 00:27:16,160 --> 00:27:18,960 him, right. So the fundamental problem is 504 00:27:18,960 --> 00:27:22,160 that that the 2 and 20 structure requires you to turn the money 505 00:27:22,160 --> 00:27:28,240 so quickly that often times you exit when when the slope occurs 506 00:27:28,240 --> 00:27:33,600 still pretty steep or you end up trying to do things to make the 507 00:27:33,600 --> 00:27:36,520 slope of the curve, the value curve steep that are really sub 508 00:27:36,520 --> 00:27:39,040 optimal for the long term outcome of a company. 509 00:27:40,080 --> 00:27:44,480 And so I think a much better model would be a formal or 510 00:27:44,480 --> 00:27:49,720 perpetual capital law where you basically take in capital and 511 00:27:49,720 --> 00:27:53,000 you invest it and you don't really have a time to arousal 512 00:27:53,000 --> 00:27:55,880 other than as long as the company's continuing to build 513 00:27:55,880 --> 00:27:59,760 and grow and, and for enterprise value, you just stay with it. 514 00:28:01,640 --> 00:28:05,440 Why did venture capital end up in the 10 year close fund model 515 00:28:05,440 --> 00:28:07,760 as the shelling point? Like surely there's there's 516 00:28:07,760 --> 00:28:09,840 other ways of doing things, but it's just the default for 517 00:28:09,840 --> 00:28:10,560 everyone. Why? 518 00:28:10,560 --> 00:28:13,640 Yeah, I'll tell. You why so the history of 519 00:28:13,640 --> 00:28:16,480 venture capital is largely in the history of Silicon Valley, 520 00:28:16,680 --> 00:28:20,200 right? And venture capital is very, 521 00:28:20,200 --> 00:28:23,840 very good for a software model. And the reason is it's asset 522 00:28:23,840 --> 00:28:26,400 like, you know, you don't need a lot, you don't need a lot of 523 00:28:26,400 --> 00:28:28,080 capital assets to do what you're going to do. 524 00:28:28,480 --> 00:28:31,200 And, and it can be, so it can be very efficient with the mod and, 525 00:28:31,200 --> 00:28:35,880 and the marginal distribution cost of the next unit IS0 IEI 526 00:28:36,320 --> 00:28:38,400 put it on AWS on the Internet and I served it up. 527 00:28:38,400 --> 00:28:41,920 And there's more, more likes, more, you know, CPMS, all the 528 00:28:41,920 --> 00:28:45,080 rest of that. So that model has been by and 529 00:28:45,080 --> 00:28:48,480 large where people make the most money over the last 25 years. 530 00:28:49,080 --> 00:28:52,160 So and and what does net capital like venture capital like large 531 00:28:52,200 --> 00:28:55,800 then in a large can and markets they're like category and 532 00:28:55,800 --> 00:28:57,240 they're like, you know, big demand, right. 533 00:28:57,560 --> 00:29:01,520 So when you look at energy or energy transition prime, it 534 00:29:01,520 --> 00:29:03,280 looks like it's all of those things. 535 00:29:03,480 --> 00:29:05,800 It's a really big end market, really critical. 536 00:29:05,800 --> 00:29:09,520 We've got to have it. The problem with it is that it's 537 00:29:09,520 --> 00:29:12,480 largely infrastructure based. It involves changing 538 00:29:12,480 --> 00:29:13,920 infrastructure, involves hardware. 539 00:29:14,240 --> 00:29:18,120 And so when the idea to start to invest in that, it's starting to 540 00:29:18,120 --> 00:29:21,440 emerge all of the very large capital allocators, the 541 00:29:21,440 --> 00:29:24,920 calipers, the calipers others look to their most successful 542 00:29:24,920 --> 00:29:29,320 venture managers and said, could you like, I loved being Kleiner 543 00:29:29,320 --> 00:29:30,640 5. I did really well. 544 00:29:30,640 --> 00:29:35,840 I was in benchmark, I killed it. So hey guys, we, we want some 545 00:29:35,840 --> 00:29:39,120 energy exposure. And my managers being who they 546 00:29:39,240 --> 00:29:41,400 are, they were like, so you want to give me a bunch of money that 547 00:29:41,400 --> 00:29:45,440 I can go manage. And, and, and so they did that. 548 00:29:45,720 --> 00:29:51,240 And the problem with that was that many of the people who came 549 00:29:51,240 --> 00:29:55,200 into the first couple ways and continue to do this have a 550 00:29:55,200 --> 00:30:00,000 fundamental orientation towards software, which is anathema to 551 00:30:00,000 --> 00:30:03,880 how you prosecute a hardware business much as an 552 00:30:03,880 --> 00:30:07,080 infrastructure business. And so you got a lot of people 553 00:30:07,080 --> 00:30:09,040 raising money. They've told their LP's that 554 00:30:09,040 --> 00:30:10,400 they, you know, something's going to happen. 555 00:30:11,040 --> 00:30:14,480 And the LP's have been acclimatized to the idea of 556 00:30:14,480 --> 00:30:16,400 short time frames because of software. 557 00:30:16,880 --> 00:30:20,080 So when they don't see it that in energy, they start to think, 558 00:30:20,080 --> 00:30:21,400 oh, well, maybe it isn't working. 559 00:30:21,520 --> 00:30:23,200 So what is the, what does the GP do? 560 00:30:23,320 --> 00:30:28,560 They kind of try to speed up the cycle and but you get a 561 00:30:28,560 --> 00:30:31,360 mismatch. You get a mismatch in in how the 562 00:30:31,360 --> 00:30:35,880 grades should really occur in versus what you know what's been 563 00:30:35,880 --> 00:30:38,920 advertised. Have you had much success 564 00:30:38,920 --> 00:30:42,520 speaking with Co investors or potential Co investors and LP's 565 00:30:42,760 --> 00:30:46,040 and trying to reframe how they should be approaching climate 566 00:30:46,040 --> 00:30:48,520 investments? Like are you able to pull them 567 00:30:48,520 --> 00:30:49,960 out of that way of seeing things? 568 00:30:51,600 --> 00:30:55,000 In certain instances, yes. And what I would tell you is 569 00:30:55,600 --> 00:30:59,120 where you've seen a lot of people doing quite well and then 570 00:30:59,120 --> 00:31:01,520 within a lot of the listing in family office environments, 571 00:31:01,520 --> 00:31:03,560 right. So it's a, it's a, you know, an 572 00:31:03,560 --> 00:31:06,280 intergenerational wealth, someone has made a lot of money 573 00:31:06,280 --> 00:31:09,840 doing something. And, and because their default 574 00:31:09,840 --> 00:31:12,720 position is that they're quite wealthy, they're willing to take 575 00:31:12,720 --> 00:31:17,320 longer time horizon views on on kind of what can be successful. 576 00:31:17,320 --> 00:31:21,080 And, and so their view is, look, if, if I have like as an 577 00:31:21,080 --> 00:31:23,560 example, if I make an investment and it takes me 10 years, if the 578 00:31:23,560 --> 00:31:28,320 compound of any rate of return is, you know, 0 for a long time, 579 00:31:28,320 --> 00:31:30,280 but then it takes off and it goes to 25. 580 00:31:30,280 --> 00:31:33,640 And my, you know, from beginning to end is 15 or 20%. 581 00:31:33,640 --> 00:31:37,720 I'm happy to wait. The the problem with that model 582 00:31:37,720 --> 00:31:39,840 when you're dealing with pension fund is the pension fund is much 583 00:31:39,840 --> 00:31:42,840 in your return needs. They have retirees who need 584 00:31:42,840 --> 00:31:47,760 money now. And so it's been a very tough 585 00:31:47,760 --> 00:31:52,600 market to convince the two will call it sort of a traditional L 586 00:31:52,600 --> 00:31:55,400 key base that this is a model that they should pursue. 587 00:31:55,800 --> 00:31:58,960 It's been much easier, I think for people who have 588 00:31:58,960 --> 00:32:01,640 relationships with family offices and some of these sort 589 00:32:01,640 --> 00:32:04,560 of longer dated intergenerational wealth 590 00:32:04,760 --> 00:32:08,320 managers. What I think would be incredibly 591 00:32:08,320 --> 00:32:13,000 interesting is if we could build a model whereby it was, it was 592 00:32:13,000 --> 00:32:16,120 available to the general public to do this sort of thing. 593 00:32:17,080 --> 00:32:19,120 And, and I mean, my car was actually in a fair amount of 594 00:32:19,120 --> 00:32:20,560 time thinking about ideas like that. 595 00:32:22,240 --> 00:32:25,880 In a way, like an open-ended fund, like a mutual fund kind of 596 00:32:25,880 --> 00:32:27,520 approach, something else. Yeah. 597 00:32:28,280 --> 00:32:30,240 I think one of the one of the areas that that we've been 598 00:32:30,240 --> 00:32:33,800 investigating and thinking about is I'm going to give you just a 599 00:32:33,800 --> 00:32:38,160 quick fun experiment. I gave a speech to Stanford in 600 00:32:38,160 --> 00:32:42,000 tours of high network conference in Stanford in 2019, where a 601 00:32:42,040 --> 00:32:44,680 bunch of very wealthy and they're called ultra high net 602 00:32:44,680 --> 00:32:47,320 worth families come from which each have a net worth of more 603 00:32:47,320 --> 00:32:50,080 than 30 million. And they said we'd like you to 604 00:32:50,080 --> 00:32:52,080 come up with some ideas to think about how to invest the crime. 605 00:32:52,400 --> 00:32:58,440 And, and what I came up with was the idea that most families 606 00:32:58,440 --> 00:33:03,120 spend between about 1 and 3 1/2% of their paying on net worth on 607 00:33:03,120 --> 00:33:06,240 insurance. So they're insuring, you know, 608 00:33:06,760 --> 00:33:10,960 homes, cars, business interruption, you know, cash 609 00:33:10,960 --> 00:33:12,840 out, hurricanes, all sorts of things because they have a lot 610 00:33:12,840 --> 00:33:14,960 of assets and they're, and they're wanting to make sure 611 00:33:14,960 --> 00:33:16,440 that they have something bad happens. 612 00:33:16,440 --> 00:33:19,520 They can do that. So the idea that the thought 613 00:33:19,520 --> 00:33:22,320 exercise that we went through as we said, well, how many families 614 00:33:22,320 --> 00:33:26,360 are there globally at that point over just about 400,000 families 615 00:33:26,360 --> 00:33:29,120 globally that have a net worth in excess of 39. 616 00:33:29,200 --> 00:33:34,400 And I said, well, how much capital would it take, equity 617 00:33:34,400 --> 00:33:37,920 capital would it take to build enough direct air capture plants 618 00:33:38,800 --> 00:33:42,480 to get from the 420 parts per million that we're up today down 619 00:33:42,480 --> 00:33:45,400 to 180? How many physical plants would 620 00:33:45,400 --> 00:33:47,320 that take? And then based on the learnings 621 00:33:47,320 --> 00:33:51,160 that I amassed from my time at Carbon Engineering and at 1.5 622 00:33:52,000 --> 00:33:55,400 became up with that number. And then we said if all of those 623 00:33:55,400 --> 00:34:02,160 400,000 families were effectively donate a percentage 624 00:34:02,160 --> 00:34:04,760 of their net worth on a manual basis for the next 30 years, 625 00:34:04,760 --> 00:34:08,679 because this is kind of 2020 to it's the 2050 target that you 626 00:34:08,679 --> 00:34:12,280 see people talk about a lot, What percentage of their net 627 00:34:12,280 --> 00:34:17,440 worth would they need to affect themselves, tax themselves? 628 00:34:17,639 --> 00:34:21,360 And it true that it's about 10 basis points and a basis point 629 00:34:21,360 --> 00:34:24,960 for because for you don't know is there's a hundred basis 630 00:34:24,960 --> 00:34:28,360 points in every one percentage. So 10 basis points is 631 00:34:28,360 --> 00:34:35,840 effectively 110th of a percent. So if 110th of a percent of all 632 00:34:35,840 --> 00:34:40,920 net worth for the top 400,000 people globally was just you did 633 00:34:40,920 --> 00:34:44,600 it every year on December 31st and God I a tax deduction to do 634 00:34:44,600 --> 00:34:48,199 it, you'd have enough capital to build every direct air capture 635 00:34:48,199 --> 00:34:52,840 plant necessary to take us from 420 parts per million to 180. 636 00:34:54,520 --> 00:35:00,760 That's a model I think is interesting because it 637 00:35:00,760 --> 00:35:05,200 essentially says to people you insured it all sorts of things. 638 00:35:05,720 --> 00:35:08,320 Isn't it worth some percentage of your net worth to ensure, 639 00:35:08,360 --> 00:35:11,320 again, I mean to future proof the climate so that all of this 640 00:35:11,320 --> 00:35:14,640 wealth that you want to hand out to future generations, it allows 641 00:35:14,640 --> 00:35:17,760 them to live in a world in which things aren't completely out of 642 00:35:17,760 --> 00:35:20,360 control. It's an insurance based argument 643 00:35:20,360 --> 00:35:24,080 and I I liked it. Have you socialized it much? 644 00:35:24,200 --> 00:35:28,520 Do people like it? Yeah, I actually have and I have 645 00:35:28,960 --> 00:35:32,600 5 or 6 groups. I've done a lot of business 646 00:35:32,600 --> 00:35:35,480 here. Sort of think of that and I, I 647 00:35:35,480 --> 00:35:40,640 think it's, I, I, I think it's also a prong up that potentially 648 00:35:40,640 --> 00:35:44,680 is, is, has a mass market reach. I mean, one of the ideas that I 649 00:35:44,680 --> 00:35:49,080 often think I, I learned not too long ago that Selena Gomez has 650 00:35:49,080 --> 00:35:53,880 635,000,000 followers on the Internet. 651 00:35:55,840 --> 00:35:58,760 And I don't really know that Selena Gomez, well, when I saw 652 00:35:58,760 --> 00:36:01,760 her on, you know, whatever the thing something in the building 653 00:36:01,760 --> 00:36:03,320 with Steve Martin there and Martin Sharp. 654 00:36:03,800 --> 00:36:08,560 But I've, I've often thought to myself, what if all of these 655 00:36:08,560 --> 00:36:15,000 people who have all this social attention were to say to their 656 00:36:15,000 --> 00:36:19,440 audience, what if you guys all, I mean, just give you a 657 00:36:19,440 --> 00:36:22,800 sensitive, again, if you have $100 million worth of net worth, 658 00:36:22,920 --> 00:36:25,560 I'm talking about 100 grand a year. 659 00:36:26,000 --> 00:36:28,520 That's nothing. It's, it's literally, it's like 660 00:36:29,600 --> 00:36:33,240 people for coal going to be $100 million and you're growing it at 661 00:36:33,240 --> 00:36:35,360 10% a year, you've made it 10 million bucks and you divide 662 00:36:35,360 --> 00:36:41,040 that by 365 days a year. Just the market movements are 663 00:36:41,040 --> 00:36:43,280 like an order of magnitude larger than what I mean. 664 00:36:43,280 --> 00:36:45,640 It's just, it's literally around the error. 665 00:36:46,560 --> 00:36:51,560 But what if Selena Gomez got on our platform and said I'm going 666 00:36:51,560 --> 00:36:55,920 to commit 10 basis points of my network, then I'd invite you as 667 00:36:55,920 --> 00:36:57,560 all of my followers to participate. 668 00:36:58,600 --> 00:37:02,040 And I've also done that calculation, which is the median 669 00:37:02,120 --> 00:37:05,800 net worth in the United States is about $125,000. 670 00:37:06,920 --> 00:37:11,800 If you and there's about 40% surveyed people in our country 671 00:37:11,840 --> 00:37:14,000 say that they're deeply concerned about comment and 672 00:37:14,000 --> 00:37:16,720 would make a financial decision based on that idea. 673 00:37:17,680 --> 00:37:23,120 See, that's like, you know, 100 million, 100 million people, 100 674 00:37:23,120 --> 00:37:27,280 million people and $125,000 * 10 basis points. 675 00:37:27,880 --> 00:37:33,640 It's like it's about $2.3 billion per year. 676 00:37:34,120 --> 00:37:38,320 So if you were to do that, you'd be the largest climate fund. 677 00:37:39,560 --> 00:37:47,720 Like by any measure you would dwarf what Bill Gates and the 678 00:37:47,720 --> 00:37:50,200 guys at Break Your Energy Adventures are doing. 679 00:37:50,840 --> 00:37:54,840 Dwarf. So the idea is this. 680 00:37:55,000 --> 00:37:59,200 Could you could you create something where the retail small 681 00:37:59,200 --> 00:38:03,520 retail participation rolled up into a larger and the and then 682 00:38:03,520 --> 00:38:07,640 directed at at a perpetual climate problems is a is an 683 00:38:07,640 --> 00:38:10,680 interesting idea. It is an interesting idea. 684 00:38:11,080 --> 00:38:15,600 It's also intriguing to me that you have highlighted DAC in 685 00:38:15,600 --> 00:38:19,840 this. Granted you are a very long time 686 00:38:19,840 --> 00:38:21,800 direct air capture person, but. Why are you? 687 00:38:21,800 --> 00:38:24,480 Obsessed with direct air capture of all the different pathways 688 00:38:24,480 --> 00:38:26,920 now, Seems like you're still thinking about direct air 689 00:38:26,920 --> 00:38:29,080 capture. You're still very much engrossed 690 00:38:29,080 --> 00:38:30,600 in it. Why DAC? 691 00:38:31,800 --> 00:38:39,360 One simple reason if we were to magically turn off all carbon 692 00:38:39,360 --> 00:38:43,480 emissions tomorrow. Then again, I'm not going to do 693 00:38:43,480 --> 00:38:45,360 some megatons. I'll do it in parts per million 694 00:38:45,360 --> 00:38:48,760 because I think most people know about 410 parts per million. 695 00:38:48,840 --> 00:38:51,400 I like that way too, personally. Yeah, it's. 696 00:38:51,600 --> 00:38:54,600 Otherwise it gets a little arcane in the math because it's 697 00:38:54,600 --> 00:38:58,160 volumetric. There is, but assuming that, 698 00:38:58,160 --> 00:39:02,080 that's about 3 PPM per year if we were to turn that off from 699 00:39:02,080 --> 00:39:05,400 the wrong morning. So 0, which is where most of the 700 00:39:05,400 --> 00:39:07,320 capital has been invested the last 25 years. 701 00:39:07,560 --> 00:39:16,840 Win solar on Bizol rest you still are by any measure 140 PPM 702 00:39:16,840 --> 00:39:18,800 too high. So really, and if you want to do 703 00:39:18,800 --> 00:39:25,200 3 / 140, rough math is 97% of the carbon that's causing the 704 00:39:25,200 --> 00:39:30,000 problem is already out there. So it's a legacy problem. 705 00:39:30,240 --> 00:39:36,760 So we need to go back and pull out the carbon that is the 706 00:39:36,760 --> 00:39:41,560 legacy of 150 years. And even if we were to eliminate 707 00:39:41,560 --> 00:39:45,360 all the new private emissions, the inertia like the physical 708 00:39:45,360 --> 00:39:50,120 inertia that's embedded in that, in that 97% is going to make the 709 00:39:50,120 --> 00:39:53,280 problems that we're having today and that are accelerating 710 00:39:53,920 --> 00:39:57,800 continue for some indeterminate me depending on who you read, I 711 00:39:57,800 --> 00:40:01,600 think it's probably 100 years. So we have to be in direct 712 00:40:01,600 --> 00:40:03,520 aircraft business, not to say that there shouldn't be any 713 00:40:03,520 --> 00:40:06,000 other things. But we have to be in direct air 714 00:40:06,000 --> 00:40:09,520 capture business or or or we're not going to get the, we're 715 00:40:09,600 --> 00:40:12,760 going to see the benefit that we're all together. 716 00:40:14,360 --> 00:40:18,000 Relative to enhanced weathering or or some of the other things 717 00:40:18,000 --> 00:40:20,960 that are happening in carbon removal, you're still so focused 718 00:40:20,960 --> 00:40:23,000 on direct air capture. It sounds like that isn't a 719 00:40:23,000 --> 00:40:25,240 criticism either. I'm sure you have good reasons, 720 00:40:25,240 --> 00:40:26,400 I just want to hear more of them. 721 00:40:28,000 --> 00:40:30,720 I think it's, I thought I believe in enhanced weathering. 722 00:40:30,720 --> 00:40:34,120 I mean I believe in all of it. I'm very much in the all of the 723 00:40:34,120 --> 00:40:37,760 about it, but I still believe that as a matter of efficiency 724 00:40:38,560 --> 00:40:43,360 directed capture plants are you could, you know 100 acres, you 725 00:40:43,360 --> 00:40:45,720 can take 1,000,000 tons out per annum. 726 00:40:46,520 --> 00:40:52,920 I, I challenge you to make that equation work at any scale of 727 00:40:52,920 --> 00:40:57,640 that nature without, without land use, water use, there's a 728 00:40:57,640 --> 00:41:00,840 whole bunch of other things. I, I think it's a pretty this 729 00:41:00,840 --> 00:41:03,520 way. We spent 100 years using 730 00:41:03,720 --> 00:41:05,880 mechanical and chemical engineering to get ourselves 731 00:41:05,880 --> 00:41:07,320 into the problem that we currently have. 732 00:41:07,800 --> 00:41:11,120 I believe that the way back out is with chemical and mechanical 733 00:41:11,120 --> 00:41:13,800 engineering. I believe that nature will do 734 00:41:13,800 --> 00:41:18,000 that will fix the problem, but not in a time frame that will be 735 00:41:18,000 --> 00:41:21,280 acceptable to most people. But if you, if you, you say I 736 00:41:21,280 --> 00:41:23,600 have 1000 years to fix the problem, just let the trees 737 00:41:23,600 --> 00:41:27,800 drop, it's fine. But if you're worried about 50 738 00:41:27,800 --> 00:41:30,200 to 100 years, you need a chemical and the chemical 739 00:41:30,200 --> 00:41:34,080 solution and DAC is the best. I, I, well, as a parenthetic 740 00:41:34,080 --> 00:41:38,480 thing, I follow very closely with David Keith and the guys in 741 00:41:38,480 --> 00:41:41,720 geoengineering and, you know, aerosol, tractoric aerosol 742 00:41:41,720 --> 00:41:44,080 injections. I, I very much believe that that 743 00:41:44,080 --> 00:41:50,720 probably will be used and, and I think of that as the Tylenol of 744 00:41:50,760 --> 00:41:52,560 climate change, which is we're probably going to have to take 745 00:41:52,560 --> 00:41:55,440 some Tylenol to keep the fever down, but we're going to have to 746 00:41:55,440 --> 00:41:59,360 continue to use director capture and other mechanisms to reduce 747 00:41:59,360 --> 00:42:02,840 the CO2 overtime and and maybe to bring it all the way back to 748 00:42:02,840 --> 00:42:05,840 where we're starting. And I think that the financial 749 00:42:05,840 --> 00:42:10,440 mechanism to make that latter piece work is much closer to a 750 00:42:10,440 --> 00:42:17,160 perpetual capital model than it is a 2 and 20 closed 10 year 751 00:42:17,160 --> 00:42:20,120 fund. Can you explain more what a 752 00:42:20,120 --> 00:42:22,880 perpetual capital model is? I think that's probably also a 753 00:42:22,880 --> 00:42:27,760 new term. Yeah, a perpetual capital model 754 00:42:27,760 --> 00:42:31,440 is, is pretty simple and it's the way that like a like a 755 00:42:31,760 --> 00:42:34,800 family, right, which are intergenerational family. 756 00:42:35,280 --> 00:42:40,280 So he simply says, as I make province, I, I simply just 757 00:42:40,280 --> 00:42:44,920 continuously roll them back into the vehicle to make more and 758 00:42:44,920 --> 00:42:46,680 more and more and more and fasteners. 759 00:42:46,680 --> 00:42:53,480 So let's say, you know, I'm the patriarch of a family and I buy 760 00:42:53,480 --> 00:42:56,160 a building Freddy. Well, when the debt pays down on 761 00:42:56,160 --> 00:42:58,080 that building and I have lots of free cash flow. 762 00:42:59,040 --> 00:43:01,920 If I have a perpetual view on real estate, I just buy another 763 00:43:01,920 --> 00:43:04,280 building. And, and I never and I never 764 00:43:04,280 --> 00:43:06,440 saw. And if you look at how like as 765 00:43:06,440 --> 00:43:09,320 an example, some of the biggest real estate empires in the world 766 00:43:09,320 --> 00:43:12,240 have been built, is that the family just, you know, when 767 00:43:12,240 --> 00:43:14,320 interest rates go down, they refinance the building, they buy 768 00:43:14,320 --> 00:43:16,800 another building and they just keep building forever. 769 00:43:17,360 --> 00:43:21,840 I believe that that's the model that will have to be used for 770 00:43:22,040 --> 00:43:25,200 director capture assets and other carbon removal assets and 771 00:43:25,200 --> 00:43:26,920 the technologies that go into them. 772 00:43:27,440 --> 00:43:30,840 Because we have to look at this as if this is 100 year problem 773 00:43:31,320 --> 00:43:35,000 and we need to have 100 year or longer time horizon in terms of 774 00:43:35,000 --> 00:43:38,080 how we allocate capital and how we measure progress. 775 00:43:39,080 --> 00:43:42,400 That as long as we're making progress and still relatable and 776 00:43:42,400 --> 00:43:45,320 moving the ball forward, then effectively there's no 777 00:43:45,320 --> 00:43:49,760 distribution, we're just going to grow forever, right? 778 00:43:50,200 --> 00:43:56,320 And that if you look at the way that if you want to think of, I 779 00:43:56,320 --> 00:44:00,120 think of carbon assets as a form of national wealth or of global 780 00:44:00,120 --> 00:44:05,120 wealth, if we want to build the global wealth all counted the 781 00:44:05,120 --> 00:44:09,160 Maple, we need to view it as if it's not just a one and done 782 00:44:09,160 --> 00:44:11,120 thing, which is, you know, campers puts in their money and 783 00:44:11,120 --> 00:44:13,360 take it off and then they go allocate it something else. 784 00:44:13,360 --> 00:44:17,200 If you say no, everybody who's invested in this is simply 785 00:44:17,200 --> 00:44:20,720 saying, I'm going to keep my capital in this lane forever, 786 00:44:22,920 --> 00:44:25,760 right? And that's why a smaller amount 787 00:44:26,160 --> 00:44:28,680 is important because you would never say to someone who's 788 00:44:28,680 --> 00:44:32,040 reasonable, hey, give me 10% in net worth and I'm going to put 789 00:44:32,040 --> 00:44:35,600 it in something you can never take out because you might need 790 00:44:35,600 --> 00:44:38,040 the money. But if you get large enough 791 00:44:38,040 --> 00:44:42,320 group of people with a small enough commitment, that equals a 792 00:44:42,320 --> 00:44:44,320 large number. And then once that number is 793 00:44:44,320 --> 00:44:49,600 into that mode, it compounds and grows in perpetuity. 794 00:44:50,160 --> 00:44:52,960 And, and that, in my opinion, is how we're going to generate 795 00:44:52,960 --> 00:45:00,680 enough carbon wealth, cover mule wealth to just, you know, I, I 796 00:45:00,680 --> 00:45:04,560 see a world when I'm logged on where there's thousands of 797 00:45:04,560 --> 00:45:10,720 carbon assets removing carbon in all forms that they're owned 798 00:45:11,360 --> 00:45:16,040 effectively for the public good in, in, in, in perpetual trust. 799 00:45:16,120 --> 00:45:18,640 And by the way, they're example in this Ross, I mean, you have 800 00:45:18,640 --> 00:45:22,280 families in England and people set up perpetual trust for the 801 00:45:22,280 --> 00:45:25,000 benefit of the fame. I'm just saying let's port that 802 00:45:25,000 --> 00:45:29,200 model for each or being favored like the the family that is 803 00:45:29,200 --> 00:45:30,560 every night. Like the whole world. 804 00:45:33,160 --> 00:45:35,040 Interesting. Well, I hope that works. 805 00:45:35,040 --> 00:45:36,960 It would certainly be better than the pressures that one 806 00:45:36,960 --> 00:45:40,840 faces. 11 takes venture dollars. I have a question about the 807 00:45:40,840 --> 00:45:43,280 future of DAC. One of the old bites I used to 808 00:45:43,280 --> 00:45:45,360 hear a lot about. I hear less about it these days. 809 00:45:45,360 --> 00:45:48,160 I wonder if it's been settled, and maybe I missed it, but do 810 00:45:48,160 --> 00:45:51,000 you suspect that the future of direct air capture is 811 00:45:51,000 --> 00:45:53,920 distributed or centralized? Centralized. 812 00:45:54,720 --> 00:45:56,320 Centralized. I sort of figured you probably 813 00:45:56,320 --> 00:45:59,520 went that way, the oil and gas. Big is beautiful, big is 814 00:45:59,560 --> 00:46:05,520 beautiful now. Now I will say I think that the 815 00:46:05,680 --> 00:46:09,120 construction of those centralized plants is margin 816 00:46:10,680 --> 00:46:16,240 manufactured, not stable. So small is beautiful in terms 817 00:46:16,240 --> 00:46:19,640 of the building blocks, but the actual configuration of the 818 00:46:19,640 --> 00:46:22,440 plants largely as much better. And and that should it's like 819 00:46:22,440 --> 00:46:27,280 basic unit economics because if I can centralized all of that 820 00:46:27,280 --> 00:46:31,040 collection in a single spot, the shared services, whatever they 821 00:46:31,080 --> 00:46:35,400 are, the electricity, the water, all the rest of that are are 822 00:46:35,400 --> 00:46:39,320 better distributed across now 200 than say 20. 823 00:46:40,360 --> 00:46:43,560 But the manufacturing will be much and in that respect small 824 00:46:43,560 --> 00:46:45,240 will be beautiful. What? 825 00:46:46,480 --> 00:46:49,320 Do you think will happen in the fight between electrochemistry 826 00:46:49,320 --> 00:46:52,240 liquid and solid sorbents? What broad pathways here do you 827 00:46:52,240 --> 00:46:53,600 think are going to be the big winners? 828 00:46:57,000 --> 00:47:03,440 I think OK, so I I seek to leave have been been with the 829 00:47:03,560 --> 00:47:07,000 Charmies. I think they all of them have 830 00:47:07,000 --> 00:47:09,960 their limitations. I think some of the limitations 831 00:47:09,960 --> 00:47:13,280 are are greater, greater limitations than others. 832 00:47:14,560 --> 00:47:17,680 I believe in liquid survey, but I believe that one of the great 833 00:47:17,960 --> 00:47:22,720 rate limiters will be how water is consumed and air produced or 834 00:47:22,720 --> 00:47:26,840 used in in process. So I think one of the great, 835 00:47:26,960 --> 00:47:28,960 great limiters the potentially of liquid challenges is the 836 00:47:28,960 --> 00:47:32,840 amount of consumption of water. People are working on that often 837 00:47:32,840 --> 00:47:35,840 definitely working on that. I think solid servants are 838 00:47:35,840 --> 00:47:39,120 interesting but require a considerable Nike heat. 839 00:47:39,120 --> 00:47:42,440 People are working on that. I'm talking my own book here. 840 00:47:42,840 --> 00:47:45,640 I, I very much believe in moisture sling. 841 00:47:46,520 --> 00:47:49,280 We're investors in, you know, very early investors in a 842 00:47:49,280 --> 00:47:52,480 company called Avnos that basically produces water as a 843 00:47:52,480 --> 00:47:54,680 byproduct of its direct air capture or consumption. 844 00:47:55,480 --> 00:47:58,200 And I think that there are limited places where 845 00:47:58,200 --> 00:48:01,960 electrochemistry will work. I will tell you that we having 846 00:48:02,320 --> 00:48:06,040 built what is invested in creating is now the they're the 847 00:48:06,040 --> 00:48:09,840 first or second largest D set of company membrane company in the 848 00:48:09,840 --> 00:48:13,600 world have real questions about ocean based stuff, not because 849 00:48:13,600 --> 00:48:16,040 of the electric chemistry, but because of the amount of 850 00:48:16,040 --> 00:48:18,560 physical water that needs to be moved. 851 00:48:19,680 --> 00:48:22,040 Again, the electric empty works for sure. 852 00:48:22,520 --> 00:48:25,560 So that's a long way to the answer, but I think all of them 853 00:48:25,560 --> 00:48:28,160 work. All of them have distinct 854 00:48:28,160 --> 00:48:31,240 limitations. I think water and electricity 855 00:48:31,240 --> 00:48:32,760 consumption are the two big ones. 856 00:48:33,200 --> 00:48:35,600 They're probably the the no problematic. 857 00:48:37,040 --> 00:48:39,400 So I think it's probably like Harvin and Winster. 858 00:48:39,400 --> 00:48:41,920 Sonyer, if you put it down and I had those would be mine too. 859 00:48:42,080 --> 00:48:48,920 Those are my 2 bets, yeah. We'll see if someone was 860 00:48:48,920 --> 00:48:51,520 listening and they work at a family office or they're part of 861 00:48:51,520 --> 00:48:53,600 a family that has intergenerational wealth in this 862 00:48:53,600 --> 00:48:55,000 way. Do you want them to get in touch 863 00:48:55,000 --> 00:48:56,680 with you? Are you ready for them to knock 864 00:48:56,680 --> 00:48:57,240 on? Your door? 865 00:48:57,600 --> 00:49:02,520 Absolutely. Jim dot McDermott at 866 00:49:02,520 --> 00:49:10,520 rasheen.com, Jin dot MCDERNOTT at RUSHEN. 867 00:49:11,720 --> 00:49:17,840 Yeah, I'm, I'm very interested in those types of conversations 868 00:49:17,840 --> 00:49:20,560 that people want to have them. Thank you for being here, Jim. 869 00:49:20,560 --> 00:49:23,360 I love being able to ask all these questions of you. 870 00:49:23,640 --> 00:49:25,600 You held your own. Thanks for teaching me all of 871 00:49:25,600 --> 00:49:27,960 those things. Thanks a bunch for having me 872 00:49:27,960 --> 00:49:28,920 Ross. I really appreciate it.