← Inevitable
Inevitable
Building the Future with Patrick Maloney, CIV
00:43:14
Patrick Maloney is the Co-founder and CEO at CIV, and this episode was recorded in front of a live audience at the UCLA Anderson School of Management as part of LA Climate Week. Patrick's firm, CIV, is a new venture capital investment firm based in Venice, California, that backs and builds companies at the nexus of industry and technology. Patrick has had a long, successful career in clean tech. Before CIV, he founded and led Inspire, a clean energy technology company acquired by Shell in 2021. And for his work at Inspire, he was named Ernst & Young's 2018 Entrepreneur of the Year Award winner for Clean Tech and Renewables. Before Inspire, Patrick co-founded Independence Energy and was on the founding team of Energy Plus, both of which were acquired by NRG. Patrick is also co-founder of The Nuclear Company, in which we are proud investors via our venture funds at MCJ.
Loading summary
Transcript104 lines
- [00:01]
A
Today on Inevitable, we are live with an amazing audience at the UCLA Anderson School of Management as part of LA Climate Week. And our guest is Patrick Maloney, co founder and CEO at civ. And huge thanks to the UCLA Anderson center for Impact for hosting us.
- [00:20]
B
All right.
- [00:24]
A
Patrick's firm SIV is a brand new venture capital investment firm based in Venice, California that backs and builds companies at the nexus of industry and technology. Patrick has had a long successful career in clean tech. Prior to civ, he founded and led Inspire, a clean energy technology company acquired by Shell in 2021. And for his work at Inspire, he was named Ernst & Young's 2018 Entrepreneur of the Year award winner for cleantech and renewables. Prior to Inspire, he co founded Independence Energy and and was on the founding team of Energy, both of which were acquired by nrg. Patrick also is co founder of the nuclear company in which we are proud investors via our venture funds at mcj. From mcj, I'm Cody Sims and this is Inevitable. Climate change is inevitable. It's already here, but so are the solutions shaping our future. Join us every week to learn from experts and entrepreneurs about the transition of energy and industry. Patrick, welcome to the show.
- [01:38]
B
Thank you, Cody. Stoked to be here.
- [01:40]
A
All right, so we're going to dig into civ, into the nuclear company, all of your past work and background. But actually I want to start on a little bit of a more somber note because I think it's a reminder of why we're all here and why this work matters. So in January of this year here in la, we faced the most destructive wildfires in California history. And the day after the fires, I was messaging friends, texting friends, checking in with people. You were one of the folks I checked in with and your response, honestly was heartbreaking. So maybe share a little bit with the group on the impact the fires had on you and how it's influencing.
- [02:16]
B
The work that you do. Yeah, absolutely. So like so many folks, I mean, I think that it's crazy to be here in la. So many of us were affected in a single moment, but all at once. And I was definitely one of those people. Unfortunately, my mom and my in laws both lost their home. The outpouring of support and love from so many people. Cody, of course you reached out so many others in that single moment. It was both this moment of complete sadness and destruction and yet so much beauty at the same time to see a the resilience of so many people who had just literally lost everything. My mom showed up at my house with a Half pack duffel bag and that's it. She has to rebuild her life from a half pack duffel bag. But just the goodwill of so many people. Shortly after that, walking into a store on Epikini and seeing somebody just noticed that something was off and just offered to give her an entirely new wardrobe. There was just this moment of destruction and beauty. And I just tend to find there's always this interesting tension right now, particularly in the areas in which we build and invest in companies where there's this unbelievable beauty and yet this shaded edge that we always have to find the tension through. But it definitely means a lot to be based here in Los Angeles, building an investment firm that's effectively investing in and helping to build companies that ideally could be an antidote to some of the transitions in the impacts that we're seeing. So we're excited to be here in la.
- [03:36]
A
Yeah. I'm sorry your family has had to navigate that. And for anyone in the room who's had to navigate the impacts as well, I'm sorry. And hopefully all of us are here, everyone listening is here working on solutions to make the problem better. I don't know if that's the right word, but less bad in the future.
- [03:51]
B
Yeah. My quick thought is we've been doing this since the beginning of time. We just consistently create new issues and then we have to go solve those problems together as a community and as a civilization. And so as terrible as it is, it's just the next great opportunity for us to overcome. And I guess I always come more from the optimist. Can't do anything about it. We might as well just find our way through. It feels like that's where we're at again.
- [04:13]
A
So you just set me up for my next question really well, which was coming out of university, you studied philosophy, which I think might just go back to what you just said. Political science and economics at Penn in the early 2000s. And then you went on to start a bunch of clean tech companies.
- [04:29]
B
Yeah.
- [04:29]
A
What was that journey like? How did you come out of university? Here we are at a university campus and decide with the background you had, this is the thing you want to go do.
- [04:38]
B
Yeah. Well, I think what's so interesting is when you really look at the foundation of philosophy, political science and economics, the core through line of all of those things is our ability to harness energy as a civilization. Whether it's in the area of philosophy, it's how we live happy, productive, meaningful lives. Whether it's in political science. You're literally talking about national Security and global power. And then when you're looking at economics, obviously literally the input to all productive output is, is some sort of unit of energy. And so it just captured my fascination. I think the thing that really captured it is that when you really look at it, you start to see that every moment in human history before every massive inflection point was some significant change in our ability to harness the power of resources that created the next massive moment of inflection. And I fundamentally believe we are literally at the beginning of that next moment. Right now, of course, we have artificial intelligence taking over every piece of the global economy. We're living in a world that's increasingly built by robots and is going to need to be powered by incomprehensible amounts of energy. And therein is of course, terrifying and super exciting.
- [05:43]
A
I've been saying for a while that I think energy is the picks and shovels of AI. It's the thing that makes AI actually be able to work.
- [05:50]
B
Yeah. And then if you zoom all the way back, it's literally the input to the output of everything globally. There's nothing that didn't start with some sort of input of some sort of resource that then translated to some sort of productive output. And once you see that, you can't unsee it. And I think what's the most fulfilling about it is I tend to find it's also the greatest lever for impact in society. If you look at health outcomes and education outcomes, they're almost always, inevitably tied to high energy societies. And so when we think about right now energy, not just really as a vertical or as a sector, but truly the horizontal enabler of everything else. Digital infrastructure, materials built world supply chains, logistics. We're now living in a world that's now energy constrained. When I first started building in 2007, we were in effectively a low demand, low volatility environment. And now of course, with AI and computers, the voracious needs of that we've de globalized. We're now reshoring industries and rebuilding domestic industrial cores. And now, of course, we also want to decarbonize in the same way as.
- [06:51]
A
I say, and doing this all at the same time. And we have to change the system.
- [06:53]
B
So it's inflecting with relatively fixed supply. Supply is a laggard. Our view is right now that dislocation is one of the most valuable and impactful things we could do.
- [07:02]
A
So take us back to this 2006 seven time you're coming out of school. How did you decide you wanted to start a Company, what was the path? You started pseudo two companies at the same time. Explain that, Dre.
- [07:12]
B
It's pretty simple. I tend to find most things in life come from scarcity. So coming from a place more of scarcity, growing up, I always thought, hey, the way to solve that is to become an entrepreneur. And so literally the day after graduating, stepped into a conference room with no idea what we were going to do, and just said, we're going to go try to figure out how to go build something of significance. And was very fortunate to have two incredible partners who were way more sophisticated than me. And for some reason, we landed on energy as one of the greatest areas of transformation. Regulatory policies were changing. Technology was beginning to reshape that landscape. Customer satisfaction is always terrible in energy broadly. And so we just felt like there was an opportunity to come in and build a new company that could ideally transform the consumer experience in that space.
- [07:55]
A
What did Energy plus and then Independence entity, What do they do?
- [07:58]
B
Yeah, so basically it was early in the restructuring of energy markets, where previously almost all energy markets were government sanctioned monopolies. We had made this decision as a country that we wanted to socialize the infrastructure and the cost associated with providing a reliable service like energy, which is a great idea unless you really want to find significant amounts of innovation. Obviously this country was formed on the idea of competition, and free markets tends to create the greatest amount of innovation in a marketplace. And so I think what we did was we ultimately were able to enter into an early restructuring into the energy markets and create just effectively a better consumer rates for their utilities. And I think we learned a lot, of course, about how to do that. We took a small amount of capital, we grew that business to a very significant scale and ultimately sold that to nrg right when the world was starting to come to this idea of the utility of the future. But I think really what I learned most was just the importance of competitive markets to be able to create thriving environments for technology companies to come solve big juicy problems. And that was probably the biggest takeaway that led me into my next business.
- [09:01]
A
Yeah, so then your next company maybe took a little bit of time off to catch a breath and then jumped right back into it within a year.
- [09:06]
B
It looked like I did. Yeah, I had a one year non compete. So by the day I formed the next entity, the day after that expired, but gave me a good opportunity. I actually always like taking a year off between companies. You step back. I always go through a structured sabbatical. First is just connection, then it's discovery, then it's thesis development and then ultimately you refine that to what it is you want to build. And it was this moment, I don't know if you remember it, where this idea of the utility of the future was one of the biggest narratives. It was really led by an individual named David Crane, who was most recently the Secretary of Infrastructure at the time the CEO of nrg. He had actually bought our two previous companies. So we were very fortunate. And it was this idea that in the future, the next great Amazon, Google, Apple is going to be an energy company and it's going to be fully technology enabled and it's going to provide a fully connected solution of the home and the business and the grid and it's going to be all powered by renewables. And fundamentally believed that that was true. Just didn't quite think that it could be done unless you built it from scratch. And so that was the premise and basis for my last company, Inspire.
- [10:05]
A
And the idea was that when a homeowner is trying to power energy from their home, they can sign up and basically guarantee that they're getting clean electrons. Is this sort of a renewable energy credit model?
- [10:14]
B
Yeah, yeah. So basically what we did is we figured, hey, if we really want to transition the grid to renewables, this was in the era where we seeing almost every massive market we had come to experience as consumers transformed by consumer demand and transportation. All of a sudden you saw the Ubers of the world completely shift the way that that ecosystem worked. We felt like we had to do the same thing in energy, which is create a better consumer experience that would ultimately create a significant amount of consumer demand and use that demand to really shift supply towards new renewable generation. And of course the only way to do that is to build a better, more delightful experience that people prefer to whatever they came from. And so that's where we started. And then we added more and more technologies around those consumers that allowed them to automate energy reductions and ultimately reduce carbon.
- [10:59]
A
How did you know you were ready to be CEO?
- [11:02]
B
I don't know the answer to that question. I just like to build things. I think since I've been a child, I've always wanted to take things apart and rebuild them back up. And I love communities of people who are aligned to a similar mission. There's this feeling of everyone who's all pursuing something bigger than themselves that are all conjointly held by a set of values that they share together.
- [11:24]
A
How about this? Looking back, what would you tell yourself today as you were starting into your first CEO gig?
- [11:32]
B
What Would I tell myself today? Good question. Geez, I don't even really know what I would say. I think I've just been the same stupid kid who will just run as fast as I can into any bullet, and this is just another one of them.
- [11:43]
A
Don't be afraid of what you don't know. It sounds amazing.
- [11:45]
B
I grew up with a single mom, and so I always made up for that gap in the nuclear family by having a bunch of mentors who are older than me and wiser than me. Initially it was, how do you shave? And then it was a little older. It was like, okay, cool. How do you build something of significance and whatever that means, Be a good father, be a good husband. Also build great communities and cultures. And so with that in mind, the advice that one of these mentors gave me was like, want some advice? I was, okay. He's like, I don't know if I should say this on the pocket, but he was like, don't take anyone's fucking advice. And the point was that nobody knows the problem better than you. You're the one who's spending 24 hours a day, seven days a week, just obsessing about this thing and this problem. And the biggest step out for me, when I really stepped into that role was just being comfortable enough to make those decisions and not carry the weight of other people's ideas and perspectives on it. And that moment was the most freeing. That moment of just pure authentic expression. And that's to me, the founders that.
- [12:41]
A
Speaks to me so much, particularly from my time at techstars. I was at techstars for a really long time, working with lots and lots of founders. These founders go through techstars and we go through this thing called mentor madness, where they'll meet 30 mentors in a two week period and just get inundated with advice and everything. And they go through mentor whiplash where they meet one really smart person who suggests one thing, and then an hour later they meet another very smart person who suggests exactly the opposite thing for their business. And the thing that's hard for a founder to realize is at the end of the day, those are inputs. And then you make the decision 100%.
- [13:14]
B
Yeah. It's literally one of the first things I almost always tell a founder we back in now is like, hey, I'm going to give you some advice right now and I'm first going to tell you to not take my advice. Because the most important thing is that you are going to know that and you're going to make that Decision and I'm going to have your back.
- [13:28]
A
You moved to LA to start Inspire? Yeah.
- [13:30]
B
Well, this was in the one year sabbatical, so where do you take a year off on the beach? I moved to Southern California, so that was the one year sabbatical. And then as soon as we got going, we decided to headquarter my last company, Inspire, in Santa Monica. Okay.
- [13:45]
A
Inspire. For folks in LA in the venture scene, venture community, I mean, it was a who's who of LA investors, Crosscut, Bonfire, Generation Ventures, bam. You definitely got ingratiated into the LA venture community quickly.
- [13:59]
B
It was a really fun time in the LA ecosystem. This was back in 2014. It was right at the beginning of the rise of LA Tech. What I love about this city is so many people come here to build something, meet anyone on the street. It's just this community of people who've all come here with some sort of dream often. And so the community tends to be so open and willing to help people in a way that I didn't find so much on the east coast where it tends to be more structured, hierarchical systems. Out here it's like, cool, whatever you want to go do that. I know five people that will help you. And so it was a fantastic place to build.
- [14:30]
A
So you built this company for a while and then ultimately you decided to sell it. Talk about your decision, particularly your decision to sell to Shell, the oil and gas company.
- [14:39]
B
I mean, listen, I think that what I've always come to believe is I think of myself more as a pro, practical radical or a practivist, if you will, which is just a fundamental belief that you have to work with people and in systems if you hope to affect change. And I feel that when I've taken a step back, I've seen a lot of folks who try to really reject those systems and are surprised when they don't work for them. And so for me, when I think about what we were trying to achieve, we were a very mission oriented company. We were a B corp. We were focused on transitioning the consumer experience to drive a massive transition towards renewables. And the question is, what's the greatest way for us to achieve that mission? And we fundamentally believe that staying private was going to be too slow. Going public was not the right place for this business. And bringing it to the Shell platform would give us unbelievable capabilities to transition one of the world's largest energy platforms globally. And post acquisition, that business has continued to grow and thrive. And we couldn't be more proud of what we've done.
- [15:41]
A
There how do you generally advise? Found who then you tell to not take your advice, but how do you generally advise? Founders trying to navigate how should their company interface around oil and gas heavy emitters, Whether it's for partnership, whether it's for taking investment, whether it's for M and A. You have a general perspective that you try to share with folks.
- [16:01]
B
My general perspective is if you think you're going to change the way they think, you're wrong. It just doesn't work that way. These are 100 year old global conglomerates with foreign decision making, often selling conflict related resources. These organizations don't change their thinking. They don't care how special you are, what a beautiful world you envision. At the end of the day, the most important thing is understanding how they think and how they make decisions and appealing to where there's that overlap between what it is you seek to do and what it is they want. Where I tend to find people get a little sideways is when they do believe that what they're doing is so special that of course this large conglomerate is going to care and want it. And the reality is the most important question is what do you want? What is it that you want and need? Because the more I understand that, the more we can find that shared space in the middle.
- [16:51]
A
I'm hearing from you something I like to share with founders, advice that they clearly don't want to take from either. But it's the person you're selling to, what are they buying from you? Not what are you selling, what are they buying? And trying to orient your thinking from their perspective about what problem are they trying to solve, what are they buying from you?
- [17:07]
B
Yeah. Which can often be unnatural when you're a founder trying to go build a world that doesn't exist. So you just think to yourself, I'm going to go build this world that doesn't exist. And so therefore the entire thing is a manifestation of your own idea. But then when you're working with these old large organizations, it's really just a question of what is it that you need, want and how do you make decisions so that I can work within your world and guard the puberts a bit to get there.
- [17:32]
A
So you took another year off after the acquisition and then you decided to become a vc.
- [17:39]
B
Yeah, I did. I did very similar sabbatical. Took a step back and asked myself what was going to be the greatest way to use ideally the last chapter of my career. Because Serly built and sold companies every five to 10 years for the last 20 years and felt like I just wanted to build the last thing and wanted to be an evergreen platform that ideally could run up the scoreboard. And the two things I tend to care most about which is the greatest amount of economic it's societal returns I can achieve in one lifetime. And it became clear that creating an investment platform was going to be probably the highest leverage way for me to have.
- [18:12]
A
What are the two things that you care most about?
- [18:14]
B
Economic and societal return.
- [18:15]
A
Oh, economics and societal returns.
- [18:17]
B
It's got to be both. I just identified very simply societal impact without economic value doesn't scale. Feels nice, fun to talk about cocktail parties, hard to create really significant scaled impact in the world. Economics without societal returns just doesn't feel like that much. After a while you're just counting commas and it doesn't really matter. But when it's together and they're intrinsically aligned, that tends to be where I like to focus.
- [18:39]
A
I mean again, given that we are at the center for impact right now having this conversation, I tend to agree with what you just said, which is you can't have impact if you aren't doing it in a very large way if you're not influencing many people. So I think that societal scale point that you're making is an important one.
- [18:57]
B
Yeah, I think underneath that is just a very rational way to invest and build companies in this category. Which is if I had any advice to anyone who is thinking about building a company for the purpose of having a big impact in society, the first thing I would say is all that's great, tell me about the actual business. Because if there isn't a real demand driven market there with real fundamental unit economics that are going to be better than the incumbent solution or technology or company, this is never going to scale. Or it might scale a little bit, but you're never going to find the true transformational impact you want. And so the beauty is it's an enlightened self interest. Find the biggest economic opportunities that in success will be inherently transformative for society. That's where I tend to like to play personally.
- [19:38]
A
How do you ensure the things you're focused on don't get perverted over time?
- [19:43]
B
I think that in some categories it's pretty easy. If you're talking about hey, we're going to go build renewable infrastructure, it's one to one impactful towards the decarbonization of the input to the most global output. In other cases it is more vague. And I think the reality is that's where we come to more theories of change. And I'M totally okay looking at something and saying I see more positive externalities here than I see negative externalities here. Therefore the world will be better because this company existed and so therefore I'm comfortable investing in that company versus not. I do think a lot of the ideological driven investing and conversation really did more of a disservice to the category than a service to the category because it almost inevitably immediately alienated most of the people you needed to work with to get something done. And it missed the point that the only things that scale are the ones that drive returns.
- [20:32]
A
All right, let's talk about your fund a little bit. So what can you share any details about the fund itself? They haven't yet announced their fund for what it's worth, so it's still not a lot of information out there about it.
- [20:43]
B
After a career building companies and always talking about the future before it happened I was like, okay, I'm 40 years old now, I think we'll just build the thing and then talk about it once it was done. So it feels much nicer now than when we were younger. But the investment for my run now is called Civ, short for Civilization. We mostly back, but every so often we'll sometimes build companies that we think are going to transform critical industries and have a huge impact on the future progress of our civilization. As I mentioned back and build. So one thing that was true for me is I thought about investing in just building an investment firm and I was like it doesn't get me super excited. But once I realized you could build an investment firm that mostly backed and every so often could still co founded build companies on platform, then I got super excited. And so SIV is really a combination of deep operating expertise. I've been a career founder. My partner Jeff Rosenthal has also been a career founder. And then we brought in a career investor and partner in Abajoy Mitra, who previously was a CO2. So we bring together a combination of deep operating capabilities, really institutional capital experience. And that's just a very unique global network that allows us to not just invest in hope it goes well, but really put leverage on terms of the capital that we've deployed by helping those founders with deep operational capabilities. It's those same capabilities that allow us to sometimes then co found and see businesses. So we're not an incubator, we're not a studio. This is much more of zero to one time a year we'll build a company on platform which fortunately we had the opportunity to now team up on in the nuclear.
- [22:09]
A
Yeah, well I'M going to come back to the nuclear company, but it's a very exciting company that we will definitely hit on and we're thrilled to be involved. Can you share a little bit for folks who might want to get to know your firm a little bit? Might want to ultimately see about having you invest. Typically, what stage are you looking at? What are you focused on in terms of hardware, software commercialization, all of that?
- [22:30]
B
Yeah, yeah, absolutely. So fund one is really focused on investing at the intersection of technology, industry and energy. We just think that right now the next multiple decades is going to be defined by really that intersection. The rev limiter to AI isn't chips, it's power. And so there's this interesting confluence of those three areas that we think is really going to define the next multiple decades. And fund one is that multiple hundred million dollars fund. We'll be able to announce the final number here relatively soon. And mostly we're investing at the seed stage and looking to really concentrate in the A stage and then zero to one time a year we'll co found and build a company on platform if we have a very convicted thesis. And what motivates you?
- [23:09]
A
Is it founders? Is it commercialization progress? Is it technology? I think I know the answer based on the deals we've done together, but I want to hear you say it.
- [23:17]
B
Yeah, I mean, I think I just feel like I'm just a founder and all I'm doing is building an operating company. That operating company is meant to invest in and build companies and ideally do it at a very high level. The only way I know how to build something that lives beyond you is consistently do better outperform. And so that's why we're designed this way. But I think in some ways I tend to find almost the best founders are always building the thing that they wish existed. And for me, when I was a founder, the only thing I ever really wanted to do was stack my cap table with other founders. There's something about that transference of having been there before and feeling how lonely it is to be at the center of all of the stakeholders who are counting on you. And so for me, I always just wished that there was a founder's firm that had spent 20 years and 20,000 hours getting their teeth kicked in building in these really, really difficult markets. And when it came to energy transition, for some reason all of our cool friends were building the next direct to consumer brand or some sort of social technology company. I was one of the few folks that chose energy for some reason. Back in 2007 and so it just gives us this unique opportunity to build a very founder centric firm and to candidly still be founders. That's why I think that the beauty of backing and building is I do believe being an investor makes you a better founder and being a founder makes you a better investor. And ideally, we think that the founders that partner with us feel that because we still are founders, we still build companies and we still back them like we are.
- [24:35]
A
I mean we have three co investments in common and the thing that I've noticed about the three that we have in common are that they are all founders who have huge network in their areas of focus. So Syed Marini of verse was previously Chief Digital Officer at Fluence, knows everything about how large energy consumers are going to need to navigate the transition of storage and power and whatnot. Zach Dell, who's the founder of Basepower, has a huge network, obviously in Texas from the Dell family, and was at Thrive Capital and spent his time focused on energy markets and whatnot while he was there. And then the nuclear company, which we'll talk all about, which has an incredibly networked set of founders, including yourself.
- [25:17]
C
Hey everyone, I'm Yin, a partner at mcj, here to take a quick minute to tell you about the MCJ Collective membership. Globally, startups are rewriting industries to be cleaner, more profitable and more secure. And at MCJ we recognize that a rapidly changing business landscape requires a workforce that can adapt. MCJ Collective is a vetted member network for tech and industry leaders who are building, working for or advising on solutions that can address the transition of energy and industry. MCJ Collective connects members with one another with MCJ's portfolio and our broader network. We do this through a powerful member hub, timely introductions, curated events, and a unique talent matchmaking system, and opportunities to learn from peers and podcast guests. We started in 2019 and have grown to thousands of members globally. If you want to learn more, head over to MCJ VC and click the membership tab at the top. Thanks and enjoy the rest of the show.
- [26:18]
B
Yeah, I think what I would say back to this founder point is at the end of the day, the most important question is always what about this person as an outlier? What about them makes them so maniacally focused on achieving this goal that they are never going to stop. And that's the most important question. If that's not true, it's never going to be an outlier company. And so first question, you could talk about Zach Dell and he's incredible. His dad was a great mentor to him and he's 100% focused on how can I achieve a company of significance in a similar domain. Jonathan Webb, the co founder of NC of the nuclear company is an absolute madman who's going to live on a job site with his wife and two children as he builds gigawatt scale nuclear reactors. It's not a joke. He will be there. He's done it before. This is that last edge of never going to quit that I tend to find is the most important.
- [27:12]
A
Let's talk about the nuclear company. So that's your current incubation or build company. You're a co founder in addition to being an investor through civ. Share a little bit about that one.
- [27:21]
B
Yeah, absolutely. So I think very aligned with the thesis that we have for fund one, which is for 20 years we had flat global energy demand, very low volatility and then all of a sudden really three key megatrends. The first of course being AI and compute and just the power demand behind it. The second being the deglobalization and reshoring of domestic manufacturing and supply chains which of course started with COVID and then got accelerated by Ukraine. And now we're living in the world that we're living in today, which is tariff wars and just unbelievable geopolitical restructuring of the global economy driving this inflecting demand for energy. Yet supply is a laggard. We're talking about energy. Electricity specifically is the most volatile commod the world. It can go from zero to $10,000 in a matter of seconds. Yet to build new supplies in inherently a laggard. We're talking about concrete and steel and rebar building physical infrastructure. And so this dislocation in our view is going to consistently get bigger with increased volatility. And quite simply we just thought that there was no way to cross the chasm between demand and supply. Except for the one thing that we had already solved 70 years ago, which was nuclear fission. And when we really looked into that problem, what we found was that the reactor itself is only 10 to 15% of the cost of a new nuclear deployment. The other 85% is everything else. So just came to the view that we don't have a technology problem. A lot of times in tech you're always like we need to go build a new technology. It's like well actually no, we may have already solved it. We have 94 operational gigawatt scale reactors in this country today producing 24 by 7 firm power that's carbon free and is the highest capacity source of energy on the grid. Which has led us to believe. I don't know if we need a new reactor right now. We seem to have fine reactors. What we haven't been good at doing is deploying reactors.
- [29:04]
A
There's a lot of money getting thrown at new reactor tech right now.
- [29:06]
B
And again, I'm a huge proponent of all of the above, but I think we also have a time focus and my time is right now we need to be deploying gigawatts of nuclear power so that we can fuel our industries and our technologies and candidly maintain the national security of this country In a world where many other folks are building far in advance of us. I think many may know, But China have 400 reactors in their pipeline. They will soon become the world's leading superpower in nuclear energy. And again, take aside pros and cons of whatever you want from a geopolitical perspective, but the reality is all of us, or many of us here, live in this country and we have an interest in ensuring the continued vibrance of our society and civilization.
- [29:48]
A
So this one was a build. Let's take the process for doing this separate from how you and Jeff and Abajoy might diligence a company you meet at seed stage and decide to invest.
- [29:56]
B
Yeah.
- [29:57]
A
So you and Jonathan and then Kiran Badraju, the CEO of Arcadia, got together and were brainstorming one day over coffee. How did this happen?
- [30:04]
B
Yeah. And I think we just felt like it was not just obvious, but now imminent. I mean, everything is timing and building companies. And really it was the demand curve driving the inevitability and the imminence of nuclear becoming the next great renaissance of power. And then we were very fortunate. Kieran and I went to school together at Penn. We were peers building parallel.
- [30:24]
A
Inspire and Arcadia were similar companies.
- [30:26]
B
We definitely were. We were frenemies. For a minute. We were friends. And Jeff, my partner, used to be one of the senior advisors to Jonathan Webb when he was building App Harvest, which he grew from zero to largest advanced ag tech company in the middle of a pandemic, built 8 million square feet of infrastructure when nobody could get out of their jammies. I think we then mutually coalesced on this idea. But I think the most important thing is there is no such thing as an outlier company without an outlier founder. And I very much know I am not the CEO. At the end of the day, there's only one way a company like this gets built. It is if you have an incredible leader and an incredible founder and CEO like Jonathan.
- [31:01]
A
Web, did you already know you were going to do civ and this was going to be an incubation or was there a minute when you thought, oh, I might go do the nuclear company?
- [31:08]
B
No. Our whole strategy as a firm is always mostly back, sometimes build. And we had come to this macro thesis on nuclear now being imminent. Around the same time Jonathan and Kieran had been seeing a similar theme. And we were very fortunate to be able to then decide to co found that business and play the role of a strategic co founder. So early on, very engaged and now more like a highly active chairman.
- [31:31]
A
One question I have across all of the work you do, and again we're sitting here at the center for Impact, is there work you do on impact directly? Are you doing impact reporting for your LPs, your investors? Are you requiring certain impact metrics from the founders you back or is it back to this notion of large scale societal change equals impact?
- [31:53]
B
Yeah. And so after a career of doing the detailed carbon accounting, all the way down to the feature level. So my last company, we were a very early B corp. We were doing accounting of every social and environmental metric. We would actually decide to prioritize features in our products. We would ultimately quantify the customer impact, the economic impact and the environmental impact of those decisions. And what I ultimately came to find is when you over quantify certain things too much, you can ultimately find yourself optimizing for the wrong things and missing the point. And so when it came to building civ, everything we do, we focus on creating net positive change in society. But we don't over index on trying to create accounting that can sometimes. I'm sure we've seen this a lot in our experience where you're trying to force the accounting to justify your position and you actually are missing the point, which is at the end of the day, there's theories of broad social change and I tend to orient on those things. Unless it's directly additional climate tech.
- [32:54]
A
We're at LA Climate Week. You don't use that phrase. You don't describe what you do as climate tech per se. How do you think about that as a category?
- [33:03]
B
Yeah, I think it's a misnomer from what I can tell. But it was convenient for a minute when we were all like, well, we can't be clean tech anymore. If we're not clean tech, what are we? Climate tech. Climate's relevant. Let's do that. The reality is, at the end of the day, we're talking about energy systems, transportation systems, compute systems, all of those are fundamental businesses that have P and LS that have underlying value that is created in their business lines. Our fundamental view is investing into those categories in a way that drives to a more efficient environmental outcome or social outcome. But part of the issue, candidly just for me, was, and this is a personal story in building my last organization, deeply mission driven, unbelievable culture. I looked up in probably year seven and I was like, oh my God. I've created an entire organization of people who think exactly what I think. And that was terrifying because I don't know how I know what's true if I don't have other people challenging what I think is true. And I think that's also tends to be true in this area of climate tech, which is if I need to go work with a Shell or I need to go work with an Exxon and the first thing I tell them about is how I'm 100% focused on climate, I've immediately lost half of that room. Most likely instead of saying I'm very focused on creating resilient energy infrastructure that's mutually beneficial and is going to drive to a lower carbon economy, those types of words tend to play a lot better.
- [34:24]
A
What are they buying versus what are you selling?
- [34:25]
B
Exactly. I personally do believe that this is an issue. I do believe in building companies that drive towards lower carbon economy. I just also really believe that these are systems based problems and I need everyone in the tent on an interdisciplinary, inner ideological basis if I hope to solve it.
- [34:41]
A
Let's shift a few questions on current events. You're an investor. There's a lot happening in the world right now. Tariffs, regulatory change, uncertainty. If you're not just a founder, if you're running a large company on what the overall cost structure of your business is going to look like in the next year. How are you navigating that? What advice are you giving your portfolio founders today around their supply chain, how they should be thinking about risks with respect to a lot of unknown that is out there right now. We don't know what's going to end up happening in terms of various tariff levels and costs and prices and all of that.
- [35:17]
B
Yeah, I mean, I think first of all at the highest level of course there's tremendous amount of pain in the cost structure for many companies in this environment and for us as a firm, I would say decide if anything it just further accelerated the investment strategy and thesis that we've had because now you're going to see all of those foreign supply chains now reshored. These are going to be, I think in our view, multi decade transitions towards national economies and defense oriented infrastructure building. And that just means that there's going to be a lot more power needs within those regions and there's going to be a lot more need for domestic advanced manufacturing and robotics companies that are ultimately going to be able to drive greater efficiency in domestic.
- [35:57]
A
So more industrial capability and more power needed to power that industrial capability.
- [36:02]
B
Yeah, it's all intersectional and it's going to require an unbelievable amount of investment. And we're talking about building a tremendous amount of physical infrastructure at a scale we haven't seen in our lifetime, which is a great opportunity. But yes, in the short term there's going to be some big transitions. Some companies will be more affected than others and I think it's going to be tough to navigate.
- [36:21]
A
Were you approaching our sector differently before the election than you have after the election in any way?
- [36:27]
B
No. The way that we invest is three key investment criteria. The first is we do what we call scale tech, not deep tech. We tend to find deep tech is fantastic, but often too capital intensive and too long duration for a 10 year fund cycle, which is what we invest out of. And we also just do fundamentally believe that many of the technologies we need are actually here today. It's not so much one of invention, it's often one of execution.
- [36:50]
A
So less focused on a new mousetrap that might solve a problem and more focused on how do you take technology and get it out.
- [36:56]
B
This is how we get to the nuclear company over a new reactor. Is this first principle question, what's the problem? And I think we just got to the problem is we can't deploy reactors. Not that we need a new one. Not to say we won't benefit from new technology all the time, but if we want to deploy 24 by 7 firm power today, we should build a deployment platform for deploying proven technologies that we already have.
- [37:18]
A
We don't need a hundred new breakthroughs necessarily. They might be helpful.
- [37:20]
B
We should layer them all in. But let's do what we can now. And I tend to find that matters in business you have to bring the revenue forward. If we're talking about a decade to commercialization, there's a lot of pain in that next decade. And I just tend to find we may not always need the next thing. We sometimes have it already. So that'd be the first thing. The second thing is we invest into demand driven markets. We build into demand driven markets. Similarly, I see a lot of companies that are building incredible technology that in success could be tremendously impactful, for which I can't tell you who the customer is or how big that actual market is. And I think that similarly that does a disservice to future investment. Because if you put a lot of capital into things where there isn't a buyer on the other side, a real market, usually those investments don't go well and that means less capital comes into the category. So we only go where there's deep consumer demand from the large conglomerates or industries or consumers, et cetera. And the last is really unit economics. At the end of the day, these are very rational markets. You're talking about some of the world's largest global strategics. Sooner or later they don't care about anything unless does this make or save me money? That's the only question that's ultimately going to matter. And so you have to invest into real technologies where you can fundamentally believe it's going to displace the incumbent technology or the incumbent solution on a purely economic basis. That merit alone is what allows you to scale infinitely. But if you're kind of on the edge or more expensive, you can get 10% of the market, maybe, but it's really around the 90 that drives the greatest amount of impact and certainly the outlier outcome.
- [38:50]
A
On that note, we've seen in the last 20, 30 years certain markets like media, where the companies that were the incumbents 20, 30 years ago, they're still around, they're still big companies, but the companies that run those businesses in those sectors now didn't exist 20 or 30 years ago. Google, Facebook, Amazon, Apple, those weren't media companies 20 years ago. It was Disney and NBC and whatever. And in energy, we haven't necessarily seen that the companies that are the big energy companies today are pretty much the companies that were the big energy companies a hundred years ago. Do you think that's going to change in the next 10, 20 years? Or do you think most of the technologies we're investing into today are going to bleed into the existing status quo companies?
- [39:32]
B
I do think that we're in a period of a massive transition for the way that we produce and consume energy as a resource, particularly of course, electrons, which most other energy is a input to an electron. It's a conversion to some new form of energy that we're ultimately using to produce an increasing electrified world. And I think that world is becoming increasingly fragmented or no longer centralized. And so I think we're seeing a world where we're going to see that transition. But again, this is a much longer transition. Moving media to the Internet is a little bit different than Moving physical infrastructure to a similar paradigm. So I think we should expect this to exist for a while while we consistently find more and more opportunities for disaggregation.
- [40:13]
A
How do you guys think about, navigate AI changes that are happening around us in that regard as you invest, how do you look at either AI being used as a resource in a company you're investing in, or think about investing in a pure play AI technology that may be in your sector?
- [40:31]
B
Yeah, I think two things. I think first of all, if I think about AI and this comes back to a simple study of humans, from what I can tell, we use everything we possibly can get our hands on since the beginning of human history, when we could grow about as big as we could gather. And then over time we figured out how to access and harness more energy. And ultimately that allowed us to grow significantly over time. And my forecast would be it's going to keep happening that way. We're just very likely to see more of what we've already seen in the past. And so I think with that it's easy to just accept AI is here, it's going to consume a voracious amount of energy. We're barely scratching the surface of the transition of this technology across every piece of the global economy. And I can't stop any of that. But what I can do is find ways to invest in technologies that are going to create greater efficiency in using those technologies. And the beauty is when you're investing in efficiency, you're effectively investing in profit. Because if you can figure out how to make chip A twice as efficient as Chip B, Chip A is now twice as economically valuable as chip B if they had the same effective output. And so literally efficiency becomes one of the greatest lever for value creation across every sector in the global economy. We just can't stop it. But what we can do is invest into the things that are going to create great impact with more societal benefit by driving towards lower carbon outcomes. That's just how we tend to think about it from that perspective. And then of course, just purely as an investor watching AI now proliferate, the companies that we're investing in, it's unbelievable what you can do with way less capital. I mean, the number of companies that have gone to a hundred million dollars in ARR with teams sub 20 in the last 12 months is incredible.
- [42:04]
A
If I were running a company today, the first question I would ask myself before making any hire is should I hire AI to do this first?
- [42:11]
B
It's a fantastic question, Patrick.
- [42:13]
A
This has been awesome. It's a good reminder to me that it's always fun to interview somebody right after they finished fundraising because then they are dialed on their answers.
- [42:19]
B
I don't know about that.
- [42:22]
A
Anything else we should have hit on that we haven't talked about?
- [42:24]
B
No. This has been incredible. Thank you to you for really leading such an amazing organization, bringing so many fantastic people, and I've obviously been a huge fan forever, so thanks for having me.
- [42:35]
A
Well, it's been a blast and hopefully we'll find some more stuff to work on the other.
- [42:37]
B
Absolutely.
- [42:38]
A
That's a wrap.
- [42:40]
B
All right.
- [42:41]
A
Inevitable is an MCJ Podcast. At mcj, we back founders driving the transition of energy and industry and solving the inevitable impacts of climate change. If you'd like to learn more about mcj, visit us at MCJ VC and subscribe to our weekly newsletter at Newsletter MCJ vc. Thanks and see you next episode.