How Do You Invest in a More Extreme World? Chris Sacca & Lowercarbon Capital

If you look at a picture of the Pacific Ocean, you'll see these amazing white clouds. They're 3,000 miles long. Those clouds are actually not natural. They're generated by the exhaust from cargo ships. The entire industry had to clean up its fuel.

That particulate matter in those clouds were net cooling the planet 0.25° C. So here we are trying to fight a race to 1.5 and we just [__] ourselves by another quarter degree Celsius. If you haven't noticed, I take it [__] personally.

For sure.

Yeah. I mean, look, I live in the American West. I live in Montana and spend time in Wyoming, just across Colorado, New Mexico, who's a big partner of our work actually. And you see life changing there.

And instead of digging in and having the science conversation and trying to convince anybody of why —

anthropogenic, you know, impacts, etc. We skip all the politics and we just get down to the realities of human life. And so whether it's fire, whether it's drought, whether it's flood, when you actually meet a rancher where they are and talk to them, you find they're a steward of the land. They really think about themselves. You know, it's easy as a scientist to think about their cattle as methane burpers, you know, 82 times worse a greenhouse gas. But when you meet a rancher, they are usually fourth or fifth generation on that land providing for what they know is feeding their community and feeding the nation as a whole. And when they see their herd shrinking every year because of drought, or you see somebody haying who isn't able to get a second cut, like we haven't had a second cut for a while in Montana. There's a couple pockets got enough water this year, but when they can't get a second cut, or you see farms down in West Texas that don't get a second harvest anymore. Like, that is real. It's where the rubber hits the road. And so, we tie so much of what we do to what the real-life impacts are on this stuff. And so, resilience is how do we skip past the politics of this stuff and actually just get to what makes life livable? What gives people more agency and control over their own destiny? Because that's what we all kind of want, right? You want to, you know, be able to provide for your kids better than your parents provided for you. You want to give them the choice of what to do with their lives and not have to worry about whether, you know, all your net worth that's tied up in your home won't be insurable, whether, you know, the business you're running won't be bankable or won't have the water it needs or the power it needs, or whether there's a risk because of where you built or what storm's coming. And so, and that doesn't have to be philanthropic. That doesn't have to be charitable. In fact, as the public sector has just abdicated more of that responsibility and as they've defunded FEMA, etc., there is a gap there where more of this needs to be addressed. And we actually think a lot of it can be done through the market. And that's what's beautiful.

Well, that's why we don't use the word climate. I don't know if we ever talked about this, but like so for us, this is New York City week. And so, because climate, if it were a political candidate — I mean, we put a slide up the other night to our team where there was a stack rank of 25 issues for voters that they use to determine who they're going to pull the lever for as they walk into a polling place. Out of 25, climate ranks 24 and clean energy ranks 23. So issues number one and two are the economy and cost of living. Well, the real thing is that everything we build actually impacts one and two. It's just been branded in this horrible culture war [__] way. And so we could go ahead and fight that and try and beat a dead horse, you know, to death with more data about what we're actually doing and how emissions are warming the planet. Or we can just go and say that everything we do — like here's the platform I would run. Like everything we do, you're worried about the cost of utilities and the cost of food, well we bring down the cost of electrons on the grid. And by providing water to ranchers for instance, and or with our ag products increasing yield on their farms, we're bringing down the cost of meat. We're making it easier for you to stretch your check, you know, as so many people have that economic anxiety. If you're worried about job losses and jobs going overseas, we are literally building factories here in the United States. We're bringing in trade-level, high-paying, secure jobs across the country, but especially in the middle of the country and in the South. And so, and then if you're worried about maybe having to send your sons and daughters off to fight forever wars to secure old dinosaur bones that we dig up and try and ship across the world and tend to blow up every now and then. Well, what we're doing is decoupling ourselves from that dependency. That's a [__] winning message, right? And so, but you just can't say climate. And so we had a big asset manager we were talking to that I've made a bunch of money for in the past. And so I was like, 'Hey, it's — we have all the money we need, but it's weird you guys aren't invested in Lowercarbon.' And they're like, 'We don't touch climate.' I was like, 'Okay, I get it. But what about our energy fund?' And so I was like, you know, we have the most energy-dense portfolio of any fund in venture. And they're like, 'Yeah, [__] we'd love to see that one.' And I was like, 'What about our advanced manufacturing fund?' And so, the verticalized industries where we're building the future — and like, 'Oh, yeah, please. What about our resilience work?' 'Oh, [__] yeah.' And I'm like, 'That's the same [__] fund. That is literally the same business. What are you doing?' And so, but it's just been poorly branded. And so, we're here to take this week back and actually gather the most pragmatic builders, the people who are doing this stuff because they know for the first time ever that we can build truly scalable solutions to it based in market principles and that where we sell the end product to somebody who's buying it out of self-interest, not out of guilt or shame or being made to go with less.

Yeah, I mean, I don't know what we'd call it, like Token Maxing Capital or something. I don't know where we go with it at this point, but it is funny because I actually do believe that carbon is just inherently expensive and dangerous and creates dependency. And so, I do —

It's about math. Like, anytime you remove carbon from the equation, you've just made profit. So, we have a company Solugen that makes industrial chemicals using enzymes instead of oil, right? And so, these chemicals are for heavy industry. And so, they start with hydrogen peroxide, you know, at massive scale. And so, because they're not depending upon natural gas and ammonia and petroleum inputs to do this stuff, first of all, they're not subject to the whims and supply chain issues of the energy market, but they're able to produce these chemicals at massive scale. And the buyer comes in and asks, 'Is it this chemical? Is it cheaper?' And then the third one that's even more relevant more than ever now is like, 'And I can just get it from down the street here in Houston and I'm not worried about whether the boat's double blockaded or not?'

And so, that company is selling to people who may not vote the same way that, you know, the guys who run the company are. A lot of their customers are from oil and gas. They're not worried about their scope three emissions.

And yet, we have just decarbonized a process. And here's the crazy part. That company is doing — I don't know, I forget what I'm allowed to say. I'll just say nine figures of revenue with 60% margins selling a commodity —

because they decarbonized it.

And so, I stand by that.

And look, we —

no shortage of money that's flown into the business and no shortage of deal flow. A lot of the reason I kind of invest time in this is just like to open it up to — we can't do it all ourselves.

And so many of the things we build are moving from the equity phase to raising debt. Now, hey look, now it's a plant. Now it's a factory. And that's very legible to a traditional investor, you know, here in these buildings in New York City. And so, how do we help them understand that instead of worrying about climate 1.0, this looks very much like other energy projects you finance. This looks very much like other factories where the first one was built, now we need five more.

And so, a lot of that is just that translation. And it's funny, like, and they will literally cast a pall on it and you're like, all right, well, consider it this way. And they're like, oh [__] yeah, that does look familiar to me.

Yeah. I mean, look, we have a company Heart Aerospace makes a fully electric airplane. And Anders is a force of nature. He pitched us when he was one person.

And we're like, so you're the guy who's going to create a fully — And by the way, our references at Boeing and Airbus both told us it was physically like physically impossible —

to actually fly hundreds of miles with electric batteries. So, his original pitch was a 19-seat airplane.

He wrote us this really hilarious tongue-in-cheek dry email once, 'Guys, I'm so sorry. Our original plan is not going to pan out. After months of testing and design, etc., we will not be able to deliver a 19-seat plane. It will in fact be 35 seats.' But, it's been amazing. They just flew the first one. So, I bring this up because he has billions of dollars of orders from that plane.

From the big carriers who are not doing it to greenwash whatsoever. He makes their unprofitable routes profitable. The routes that they have to serve to Boise, etc., so they can have gates at LAX. He makes those profitable because now they plug in the plane, it has very few moving parts. It doesn't require all the, you know, the mechanical interventions that a normal combustion engine plane does. And so, and it's beautiful like that. That's my favorite customer.

Unbelievable.

Yeah.

Domestic technology. Stuff we have, right? Like, we have wild lithium deposits right here in this country. And so, we have our company Lilac that mines lithium. They originally pitched us it would be 5,000 times faster and more efficient than conventional methods. Turns out it's 10,000 times faster. That's an amazing slide when you —

Right? They were sandbagging us, but using 99% less land and water. And so, but that's amazing. So, they originally operating down in, you know, Chile and Argentina where those deposits are. But, they're right here now in the Great Salt Lake. You can find that stuff. You can extract in a way that's actually beneficial to the environment and that helps fuel this energy transition. And so, you know, my favorite when I see people buying electric cars and also have a MAGA flag flying in their yard, which happens a lot in Montana and Wyoming. That warms my heart.

Because they're doing that out of sheer self-interest.

You know, when I see panels up on their barn and a 'Don't Tread on Me' flag, I'm like, that's great. Because that actually is how to be independent, right? And so, all those market forces are starting to finally — that flywheel is flywheeling.

I was raised by a single mom. I went to school on financial aid and I always really cared about these questions of ESG. I actually did care a lot about social and governance, but when I went to do a lot of that work in Indonesia and study that populace, I came to realize that that's a country with 36 different single islands. And it's going to be one of those places that's more affected by climate change and extreme weather events sooner than everywhere else. And it also has an enormous pool of natural resources. There's rubber made there. A lot of critical minerals come from Indonesia. A lot of manufacturing comes from Indonesia. But the big takeaway was that you couldn't care about women or education or any of those social outcomes. The zero-to-one problem was resilience. It was climate. And so, that was the original genesis of that overall thesis, but at that moment in time I thought that's an amazing thing to have studied academically, but it's not ever going to translate to something I can do with my work. And so, I went back. I worked at JP Morgan. I was working in tech investment banking. That was the group that had the biggest overall transaction sizes. So, I thought it would be the place I would get the biggest bonus. And that was at that point in time what I was optimizing for. And then I worked at Primer and private equity. And then I had — like a lot of people at this moment — I moved over to Sound. I moved to Los Angeles. There were a huge number of people at this point in time who were beginning to leave the Googles, the Goldmans, the Microsofts of the world. And they were moving to Palantir and Anduril and SpaceX and Tesla, and they were moving to Southern California. And I thought that's kind of a weird, interesting movement of talent, and I'll follow them and see what we're doing. And so I worked at Sound —

like really attracted where the talent is going. That's funny. Kai is not attracted where the market is as much as like where are all the smart, get-[__]-done people going? That's where I want to be. That's what fuels you. I've just noticed over your career is like that's a great signal and then those are the people you like to just hang out with that actually push you too. So —

Like a Google search. Yeah. And so we weren't actually connected and so she quite literally did online research. We call her Kai GPT by the way.

And so she's always had an army of agents working for her and I've never seen anyone with more throughput than Kai. But through her classical analytical framework she was like, 'Okay, Lowercarbon has the highest density of this stuff. That's who I want to talk to.' Yeah. And it was wild. And so now she's one of our partners and is leading a whole new layer of this. Like for us, I mean, you've come from the consumer web world before and you know that a lot of that initial investing is gut-based. You don't know who the user is necessarily and then you have to teach them why they care about the thing. And there's some financial modeling. Some of it's real, some of it's just Kabuki that you're doing for the sake of your investors. But what we found in this business is that so much — basically everything we are building is a substitute good for something that already exists. We're just doing it better, faster, cheaper because we're not using carbon in the process. And so as a result, it's kind of like cheating. We get to talk to the customer before we ever even write the first check. And we get to just interview them. How do you buy? What do you pay? What do you worry about? What kind of lead times do you have? How do you want it delivered to you? What would you do differently if you could do anything in this space? And we literally have that whole file before we write the seed check. And then along the way, our job is to make that thing better, faster, cheaper. You know, maybe in the first part there's a green premium. Ours is to get below price parity so people buy it, you know, out of sheer self-interest. But what we started to realize is that as we got to Series B, you know, that's a place where now you have so much data. You have such a deep understanding of this company. And by then you know if it's working or not. But at that point you have to kind of re-underwrite it. So all right, we got it from zero through Series B, and I realized we didn't have that muscle within our shop to do that deep — We had great technical analysis of, you know, de-risking the technology or the science. We had great initial product and go-to-market stuff. We're good at rounding out somebody's C-suite and hiring them accomplished operators. And you know, so many of them come out of traditional tech companies. And so whether it's FAANG knows how to build companies or if you're building something, that ecosystem from Tesla and SpaceX can't be beat. But then from there we were missing that how do we actually do deep dives on these companies to realize whether from the Series B or C, there's still another 15x to make in the investment here. And that's where Kai comes in and she leads our growth efforts. But it's taught us so much that feeds all the way back to our seed investing now. How to ask even better questions and do better supply chain analysis from day one. It's just been awesome.

So, I'd built Lowercase with my wife who's my silent co-founder on it, Crystal. And you know, that fund returned 205x. So —

That worked out. Our second fund is like 17x and people are like, 'What happened, man? What [laughter] like what, you know?' And so that worked out. And we were good at it. And in the beginning, it was hard to convince anyone to give us money. And then as you start to show you're good at it, everyone's throwing money at you. So every single person around us wanted us — the inertia, the momentum of that thing. And we could have milked it. We could have just continued to raise funds, bigger funds, hired up. But the reality was I was not finding it fulfilling anymore.

And so, you know, we had a junior partner working for us bringing us, you know, dating apps and e-gaming and I'm like, 'Bro, I just can't give a shit.' And you can't do this work if you don't give a [__]. Like, when you're really — when you're an entrepreneur or you're working with entrepreneurs, you lose track of which day of the week it is. That's just it. Like, the phone rings and you don't know if it's Sunday or Tuesday. You just need to solve a problem. And you don't know what time zone it is because so much of your work is done over on the other side of the planet. And to do that, and the sacrifices necessary, it has to mean something to you. And so, you know, I did Shark Tank for a while and I was like, 'I love the entrepreneurial spirit. I love the courage of these everyday Americans pitching this stuff.' But when we do a deal on a show like that, that's like a 10-to-15-year commitment, right? I mean, if you get married on The Bachelor, like, you know, and you love those shows, but if you get married on that, it's not a shock when you announce your annulment six weeks later. And so, but if we're investing in a company, we are literally signing up for over a decade of work together.

And so, you know, I remember somebody pitching a kitchen gadget and I'm like, 'I get it. I love the founders. I love this thing. I think there's a market for it. But is this really what I want to be doing with my time right now?' And I hear the same thing of people working on SaaS, right? I mean, can you really elegantly stand up and explain? I love walking through an airport with my kids and they're like, 'What does that billboard mean?' And I'm like, 'It means absolutely [__] nothing. That is just some middle manager trying to advertise to some other middle manager for their quarterly quota of the [__] they're buying.'

Yeah, it means [laughter] it means absolutely nothing. Even the people who work there know it means nothing. And so, there have been a lot of us who have been lucky to have the first chapter go really well. And that first chapter is by necessity. I needed Lowercase to work because my first couple checks were credit card checks and I was still paying back my student loans, right? When it turned the corner was the very first time in my life where I could do something by choice. And so, when I announced in '16 that I was retiring Lowercase, it was shocking to every other person on the planet —

except me and Crystal. We were the only ones who knew what our scorecard was.

So, my first piece of advice is like know what actually matters to you, your own individual scorecard.

You're the only person in the world who knows what your family means to you, what your personal health means to you, which hobbies you give a [__] about. You know, I was just talking upstairs with — we were talking about one of our first entrepreneurs, one of the co-founders of Heroku. And when he had an exit and they did really well, one of our mutual buddies was helping him with his money management and he's like, 'All right, what do you — you know, what's build your budget?' And he's like, 'Well, this is my Burning Man art car and this is my record collection and these are the speakers I need.' And my buddy was like, 'Okay, we're going to carve that money out to light on fire with those things that are really important to you and then here's the rest of the stuff we're going to put in fixed income to make sure it never goes away.' But it's funny because my buddy Owen who manages money for a lot of great entrepreneurs has the EQ to understand like I need a person to tell me what actually matters to them. Everybody's got their own set of priorities and instead of reading somebody else's blog post and being forced by that, you're the only person who knows that scorecard. You're the only person who knows like maybe you lost your best friend like I did at age — when he was age 46 and you're like, [__] we're guaranteed nothing. I need to take advantage of every single day I have and accelerate that life experience. So I have no bucket list. It was inspired by Todd Wagner. I live my bucket list in real time, right? Number two is — for too long a lot of work that has positive impact has been painted as concessionary, as some kind of sacrifice, as some kind of like compromise or philanthropic. And done right, it doesn't have to be that way at all.

From day one. I mean, you can look at my very first blog post on this and I was like, nope. I feel like we had the benefit of not being in the industry before, so we weren't conditioned to think this is where money and souls go to die, which is literally what some of my mentors told me when I told them we were starting this thing. They're like, 'No.'

And it's true. For a generation, if you wanted to invest in this space, if you wanted to invest in new energy generation through decarbonized means, you needed government subsidy, and you needed people who were willing to pay multiples of what that power, you know, was worth in the market. But we started to realize — I had this thesis, and then we went out and gathered data for a while. We started to realize that those lines were crossing, your, you know, non-labeled axes, that the unit cost of producing clean stuff was actually getting to where price parity or price advantage was coming into play.

And that we could, you know, like what are there, two or 300 million people on the planet who can afford to pay more than the market price for something because they've been browbeaten into feeling bad about their lifestyles? Like the only way you can build massive companies is when you can address 8.3 billion people on the planet. And so that was the core thesis from the beginning.

And it took a lot of swimming upstream, and a lot of people were talking us out of it. Same thing with hard tech, by the way.

Unbankable. It was totally unbankable. So was hard tech. So, you know, for a long time hard tech was unbankable because of what hard tech meant was design something here and have it made in China. And so you have no control over that, supply chain issues, transportation issues, IP theft issues, you know, like it was a nightmare, right? And so that's why so many investors are scared off of hard tech.

What's happened thanks to all the alums, you know, you can speak to this in El Segundo, like all the alums out of Tesla and SpaceX, they know how to build hardware better than anyone who's ever walked the planet, particularly ex-China at this point. But some of them go to China, learn, and come back and improve upon it. Um, it's wild, and so we now see hard tech in the verticalization.

10 years ago if somebody pitched you and said, 'And I'm going to build my own factory,' you'd be like, 'Get the fuck out of here.' Like why would you ever waste all that money? Have somebody else build it. Now, it's table stakes to be like, the only way you can actually get to where this is price advantaged is to build your factory. And strangely, in the United States of America, in California and New Mexico, yeah, in California and New Mexico is probably the very best place in the world to build right now. Texas, obviously. But then these other places will sneak up on you.

Like, Antora, our company that does thermal energy storage, so it's 24/7 solar. Basically, all the solar that comes down or otherwise gets sent in the ground and burned. Cuz yeah, we generate more during the day than we can use, and then you don't have it at night. Turns out shade and darkness is a bad time to generate solar. So, the extra solar comes and heats up these massive thermal blocks. They're like half a shipping container blocks. And so, those things glow hot. Sun goes down, and now you've got this stuff that you can dispatch as industrial heat, which is one of the biggest consumers of energy in the country, or in the world, really. Or you can dispatch it as electricity. There's thermal voltaic cells that they excite the electrons. And they last for days, by the way, not just hours. So, you can literally have 24/7 solar.

So, the biggest installation, the biggest battery in the world, is up in the Dakotas, and it's run by a biogas plant. I mean, it serves a biogas plant. They don't really give a fuck whether it was clean or not. And it shut down the coal plant literally adjacent to the place because it's just cheaper to run it this way now. And so, it's like it's my dream to see this coming together. A customer who buys it cuz it's the cheapest, most available power. The coal plant has just been obviated. No matter what this administration did to try and make it cheaper, it's just not cheap enough. So, it's been obviated, replaced by solar. And the whole thing is working, and we're building. We're building stuff here at a scale that literally eclipses what's getting built in China. Like that, I'm fired up about it. It's awesome.