Reading: Decarb decade is the obvious path: a world positive view by Andrew Beebe8 min
Decarb decade is the Obvious path: a world positive view by Andrew Beebe
SOAKED AT SLUSH 2021 – ARTICLE 4/10
Obvious Ventures was founded on the belief that the most valuable companies of our time will be the ones solving humanity’s biggest problems – through the three investment pillars of Sustainable Systems, Healthy Living, and People Power.
“I learned something from Slush. Somebody on stage said: ‘Using the full breadth of the human potential, the full breadth of human opportunity. Not just imagining a future that has changed but imagining a future that has progressed.’ I thought that was a beautiful way to talk about the diversity of creative spirit. I loved it.”
People have varying ideas of what change means and the ideas are not necessarily aligned with where most people would think society needs to go.
“We are big fans of positive progress. That’s why we’re called world positive investors.”
Expect to learn about:
- Andrew Beebe’s path to Obvious Ventures
- How Obvious Ventures spots trends
- What trends Andrew is excited about
- What kind of captains are needed for green vessels
Where Obvious Ventures and Andrew Beebe meet
Obvious Ventures was set up seven years ago by purpose-driven founders, previously involved in growing companies like Apple, Twitter, and Patagonia. Andrew Beebe joined Obvious Ventures right at the firm’s inception to lead investments into climate tech and clean energy solutions, and his investment thesis has led the company to invest in companies, like Proterra (an electric bus company, $PTRA), Lilium, (an electric flight company, $LILM), and Amply (an electric fleet management company).
Prior to Obvious, Andrew was an entrepreneur and built companies around sustainable systems for nearly two decades; first in the Internet 1.0 days in the late 90s when the revolutionizing tech felt new, exciting and dynamic, and later in the first cleantech wave of early 2000s.
“I got excited about trying to match profit and purpose in the work that I was doing and find the next big wave just like the internet, but something more immediately impactful.”
He was awestruck by solar in 2002 and eventually co-founded Energy Innovations in 2003, which he grew from a business plan to a major solar developer serving customers like Google, Disney, and Sony Pictures.
“Al Gore’s Inconvenient Truth hadn’t come out yet and I was in the audience at an early screening of the movie. It was easy to get a ticket because no one was paying any attention. It had the same energy as the internet 1.0, something dynamic was happening. I got excited about it and built a couple of solar companies, and was part of a massive effort to crush the cost structure of renewable energy. We took the cost of the solar panels down by 95%.”
Spotting trends – how to pave the way for progress
The job of a VC is in large part about identifying trends, perhaps particularly so for a VC like Obvious Ventures seeking to re-imagine trillion-dollar industries. Hindsight is 20/20, but how can Obvious Ventures double down on ideas at a moment when they might still seem… well, not so obvious, to the majority of people?
Intrateam expertise. Obvious Ventures’ team is made up of people with domain expertise within different categories. Having a broad set of expertise in the team is the key to evaluating which trends to pick up on and which to leave at bay.
“Food is not my focus area. I’m a really big eater, but that doesn’t make me an expert. I tend to focus on energy and mobility in the climate sector.”
“If somebody comes to me with a computational biology company technology to accelerate drug discovery, I can send that to Nan Li who focuses on comp bio. There are cases where we simply say, ‘This is complex, and we don’t know enough to make an informed decision. We’re out.’”
Consulting external experts. While still on the doorsteps of investing in Lilium, Andrew admitted being unqualified to make any technical touch on Lilium’s vector cross-technology. So he turned to Dean Kamen, a famous American scientist.
“Dean ran a helicopter company, he knew all about it, it was easy to get his perspective.”
Turning to scientists and other experts in their network Andrew and his partners have been pointed to the right direction or the right research paper, and cautioned when necessary. “We’ve been told ‘here’s why this is dangerous territory’ or ‘this is why you should or shouldn’t do it.’ We absolutely rely on them.”
Yet ultimately it is the entrepreneur pitching to VCs that should be the expert.
“When we sit down with an entrepreneur to hear a pitch, if we’re the expert in the room, we’re in the wrong room. We tend to try to listen and learn from them. We can do that to some degree across categories.”
What future trends is Andrew excited about?
Quite a few things can fall under climate tech, such as Beyond Meat, which Obvious Ventures has invested in: “I love the company, and would consider it a climate tech company.”
Andrew is also excited about other innovations within foodtech – basically whatever will reduce carbon emissions right now. “My personal view is that people are going to continue to want to eat animal protein. We don’t really have enough time to completely replace that infrastructure. Maybe we should, for many reasons, someday in the midterm. But in the near term, I’m more interested in finding solutions that reduce the carbon impact across the industries that exist right now.”
This ranges from reducing livestock methane emissions to lab-grown meats.
“We’ve looked at companies that use kelp to reduce methane from livestock mainly from cows and pigs. I’m thoroughly supportive of lab-grown meats, but those are tricky, because they may take a huge amount of energy, not just electricity, but also other inputs.”
“Foodtech is an explosive area of startup growth and I’m excited about it.”
Decarbonization of Agriculture
“Innovations in agriculture are a little bit trickier because some things are just good ideas and not necessarily great venture categories.”
The sphere has many promising innovations, from adjusting livestock feed to reduce emissions from digestive systems, to opportunities to reduce emissions through decreasing fertilizer inputs and capturing methane emissions from manure.
“The Haber Bosch process produces a massive amount of CO2 to make nitrogen fertilizer out of the air. It’s super cool, it just turns out that it’s terrible for the climate. Just like insulin, it changed the course of humanity, but we now need to remove that process. That’s a venture opportunity, and we’re already seeing companies doing it.”
We spent a decade proving that we could decarbonize energy generation, and mobility is now going through a similar decarbonisation wave. A recent example is automotive – everything’s going electric.
“There’s this transition happening where the tier two suppliers to automotive actually can’t keep up. The big companies are not innovating.”
There already exists a large group of suppliers of parts to electric vehicles. Many of these suppliers have emerged with, and also without, the presence of ex-Tesla engineers and they’re transforming the whole hierarchy of the supply chain for vehicles.
“Where the vehicles with internal combustion engines are dependent on traditional players in the industry, EVs don’t have something like 60% of the parts of a combustion engine. These emerging suppliers are EV-first – it’s a whole industry swap out.”
And the opportunity yet remains to be fully seized. “There’s tons more money to be made there because there’s so much doubt and a lot of people don’t really know or believe it’s happening. Where there’s a contrarian opportunity, there’s money to be made in venture.”
Captains for the green vessels: Combining science and entrepreneurship
The greatest innovations and breakthroughs in climate tech and sustainable development often spring from academic research and labs. On a quest for finding technical founders, Andrew also used to spend time going through technical research conferences.
“But it’s not just a matter of finding great technical ideas, it’s a matter of finding a great technical founder who could also be an executive.”
It pays off being a technical founder when solving the most troubling problems of our time. But still, tech is just one piece of the puzzle.
“We look at team, TAM, timing, and tech holistically. If the tech is slightly off, or it needs to get an upgrade or swap something out, there’s a possibility to do that. Swapping out your entire team is very hard. And realizing that the market you’re going after is much smaller than everyone thought – very hard.”
Andrew’s tips on leading the vessel
No one way to lead. “We’re learning from our entrepreneurs every day about COVID, and how to work in times like this. What’s your hybrid plan? Are you going to be completely virtual? It’s a challenging yet exciting, dynamic time for leadership.”
Andrew thinks the same applies more generally to being a leader or founding a company. “I’m sort of hesitant to say, here is the way to do something – there are many, many ways to be successful.”
But he does have one piece of advice…
“I am a big fan of – it may sound trite – but having value alignment within an organization. When you all share some fundamental views of what the future could look like, and you share the core ideas of how you want to work, you are on the right track. And what probably puts those things into words and actions around, is you.”
Value alignment may seem like a self-evident thing, but has a significant impact on how the company is run in practice. An evident distinction is in terms of orientation to strategy, pivots, and agility – some are more conservative and others much more casual about shifting things around.
“Agile may sound like a cool word, like something you should be, but if it means that every two weeks your CEO tells you we’re doing something different, that can be super complicated, and maybe not that valuable.”
You also need to figure out exactly how deeply you want to live those values. “Are you all for transparency? To what extent do you live those values? This is the hardest part.”
“It doesn’t mean you’re going to be successful, but I do think it’s a good way to lead.”
Andrew Beebe (Obvious Ventures), Brook Porter (G2 Venture Partners), Tony Fadell (Future Shape) & Julia Trotman Brady (Valo Ventures)