Former Meta CTO Says AI Will Prompt a New Wave of Energy Innovation

“Energy access has become a boardroom conversation in a way that wasn’t true literally four years ago,” Mike Schroepfer, former Meta CTO and now climate VC, tells the Zero podcast.

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(Bloomberg) — Climate tech is not the hot investor thesis it once was a couple of years ago. After several record breaking years, and billions of dollars being poured into climate startups, venture capital investments are way down. 

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This week on Zero, Akshat Rathi speaks with Mike Schroepfer, who runs Gigascale Capital, a venture firm focusing on climate investments, and used to be Meta’s chief technology officer. 

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Schroepfer shares his views on the current investment climate, the danger of funding cuts to US research, and why demand for AI will prompt a new wave of energy innovation. 

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Listen now, and subscribe on Apple,  Spotify, or YouTube to get new episodes of Zero every Thursday. 

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Our transcripts are generated by a combination of software and human editors, and may contain slight differences between the text and audio. Please confirm in audio before quoting in print.

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Akshat Rathi  00:00

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Welcome to Zero. I am Akshat Rathi This week: Inside the mind of a climate VC.

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Akshat Rathi  00:20

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Climate tech is not the hot investor thesis it once was a couple of years ago. After several record breaking years, and billions of dollars being poured into climate startups, venture capital investments are way down — lower than they were in 2019, according to PwC. Much of the hot money has now moved to AI. In all that time though, the importance of investing in climate solutions has only grown in importance. And so has the number of people working on them, bringing in skills and expertise from other industries into the climate solutions space. Mike Schroepfer is one of them.

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Mike Schroepfer  00:59

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Energy access has become a boardroom conversation in a way that wasn’t true, like literally, four years ago. If I don’t have access to energy, I can’t build the compute power I need. I can’t build the data services, the AI models, and I may lose out to my competition.

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Akshat Rathi  01:14

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From 2013 to 2022, Mike was the Chief Technology Officer at Meta — the company behind Facebook, Instagram, WhatsApp and Oculus. There he helped build out Meta’s data centres globally, and led the integration of the Oculus virtual reality headset. After leaving Meta, he founded Gigascale Capital in 2023, a VC firm specialising in climate tech. Gigascale has invested in a wide range of companies, from those trying to create green steel and crack nuclear fusion to ones trying to vaccinate cattle to reduce methane burps.  Mike also founded Additional Ventures, a philanthropy which focuses on early stage research in biomedical and climate science. I wanted to ask Mike how he sees the climate tech landscape in 2025, the challenges of manufacturing in the US vs China, and how data centre demand is leading to innovation in energy.

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Akshat Rathi  02:15

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Mike, welcome to the show. 

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Mike Schroepfer  02:17

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Thank you. Glad to be here.

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Akshat Rathi  02:19

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So you’ve come to investing in climate from a different background than most people coming to investing in climate. You’ve come from scaling companies in the software sector, working at large software companies, but now you’re doing something that is much more hardware focused. Most climate tech solutions tend to be building things in the real world. What have you found that’s different thinking about companies that do hardware rather than software?

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Mike Schroepfer  02:50

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Well, I want to correct one thing, which is: most people think of Facebook as a software company, but three years into the job, in 2011, I started building data centers. So I built 10 million plus square feet of data centers in 17 regions all around the world, over a decade or something. And then a few years after that, we bought this little company called Oculus, which I ran the integration of, and we started shipping consumer hardware. So if you’ve ever used an Oculus quest or Ray Ban-Meta smart glasses, you’ve used one of our products. And so I’ve had all the joys and pains of building enterprise hardware at industrial scale. And the double challenge of scaling consumer hardware, all the fun and pain of doing that, and trying to make margin on a product that consumers can return to the store if they don’t like. It’s a wider scale of things than most people, when they think of Facebook, think about. So the jump to climate tech — part of the appeal of it — was actually taking those learnings: I’ve shipped millions of devices, and I built scale from scratch that very few people have. And so I think all of those apply. If you look at our portfolio, we have consumer hardware products, we have consumer software products, we have enterprise hardware products, and I think it’s all stuff I’ve worked on before.

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Akshat Rathi  03:59

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But in terms of what you need to do in climate, it tends to be products that are either just greener versions of existing things, or they are going into a market where the margin is not that high. Whereas tech hardware products tend to have the capacity — not initially, but when there’s scale — to have a large margin, so it’s still a harder challenge or a different challenge, right?

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Mike Schroepfer  04:20

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Well, everything is different. Every market is different. I’d say that generally, I’m looking for products to begin with that have some sort of massive advantage. The right to win as a startup means you’re coming in with a 5x or more. Why is this product uniquely good or uniquely different? I’ll just give you the example of Mill, which is one of our investments. It’s a home composting device. So it looks like a trash can, but you throw your food waste into it and then overnight, it grinds it, dehydrates it and shrinks it down. So a normal family, after a month’s worth of food waste, gets something about the size of a shoe box that looks like coffee grounds and doesn’t smell. The pitch to consumers is pretty simple: do you enjoy taking out your trash. Do you like it when your trash smells? The answer to most people is no. It’s like, great, your trash doesn’t smell, you have to take it out a lot less. Oh, and by the way, we’re massively reducing methane emissions from food waste. And this is the sort of product that, once someone gets one, you’ll know about it, because they will tell you multiple times how awesome the Mill is. They have what’s called a ‘net promoter score’ higher than — having shipped consumer products and knowing how hard it is to get those — higher than most I’ve seen. And so that was the first unlock. It was like, ‘wow, this is something people really like.’ The very next question was, ‘How much does this thing cost to make?’ So they showed me the bill of materials. I said, ‘Okay, to make this profitable, we have to get the bill from X to Y.’ And I just went through the thing and said, ‘yep, we can do that.’ And in between the investing window of when I invested and now, they’ve made massive progress. It’s gonna be a great business. Gonna be profitable. They’ve done $20 million in revenue in the last 12 months. And then there’s opportunities to do bigger commercial engagements with offices and other people who have massive food waste problems. So I think it’s an example of trying to take some of those skills and learnings and apply them in these spaces. 

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Akshat Rathi  06:02

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Well, most of the tech products that you’ve shipped, that are being shipped today, tend to be made in China. Where is Mill made?

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Mike Schroepfer  06:10

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It’s got a diverse supply base. They haven’t disclosed exactly where it’s made, but it’s a diverse supply base, and they’re doing just fine with the tariffs. So I’ll just say that much.

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Akshat Rathi  06:20

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If you think about the moment that we are in, is there anything about policy changes, the directions, the tariffs, that have made you rethink your own climate investing, not just principles, but areas that you would like to invest in going forward?

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Mike Schroepfer  06:34

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Yeah, I think that I got to investing almost by accident. I didn’t start out saying, ‘I want to be an investor. I want to be a climate investor.’ I start out saying, ‘I want to start dedicating my time, expertise and resources towards the climate crisis.’ And I started on the philanthropic side, with funding science and funding policy, and then realized that the way a lot of these markets get transformed is through businesses. If you think about: where would we be in the electric car space without Tesla? Where would we be in space without SpaceX? Where would we have the vaccines without Moderna and others? And looking at that, and thinking about investing coming from this angle. It made me, from the very beginning say, you can call it climate, but these are companies. They need to make money. That’s the definition of a company. They need to sell a product that people want for more than what it costs them to make. It is the basics of a business — having not gone to business school, that’s my 101 for business. And so it caused us to really focus on areas where that was possible, and there were some technological edge, some change in the market, that opened a window. And having been in tech a long time, what I like is exponential trends in your favor. So what’s been powering AI, for example, is an increase in data and increase in compute power. And those are things that happen whether I go to work every day or not, so that’s awesome. I think you see the same trends at the same scale for battery prices. For example, battery packs and battery cell prices. So if I’m trying to build a new business that’s based on batteries, my input costs are going down without me doing any work. And that’s amazing. That means that I’m getting more and more competitive day by day. And so we look for businesses like that, where you have some tailwind that’s driving you into a cost advantage, or some technological leap that gets you there, or you’re breaking into some massive market for which you know it may be a high risk, but once you get there, it’s just incredible how much you can drive in terms of revenue.

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Akshat Rathi  08:28

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But if you look at the mega trends in climate tech that have enabled that kind of cost reduction, whether that’s solar, wind, batteries, those have happened because manufacturing has scaled somewhere else, mostly in China. Whereas, if you look at what America has contributed in terms of bringing down the cost of climate tech, you could bring up an example like Tesla, but it could never crack a $30,000 EV as Elon Musk had promised. So if we go into this world as we have in the past six months where we start to disintegrate relationships with China, move supply chains back to America, things will become more expensive. They won’t have the same mega trends that have continued over the past two decades. They will come later if the manufacturing setup sticks around for that period, but in the intervening period, things are going to get more expensive, harder to build. How are you thinking about operating as an investor in that environment?

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Mike Schroepfer  09:30

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Yeah,I think globalization brings efficiency and de globalization is going to increase costs of everything going around the world. So I think that’s just true. I quibble with one point, which is, first of all, the US is often the source of many of the actual innovations. So LFP batteries — invented in the United States, commercialized and scaled in China, we missed that one. But there are places where, and I’ll call out SpaceX, which has a very local supply chain and has built most of their own stuff. They’re not really relying that much on overseas supply chains for what they’re building, and they’ve built an expertise and talent. Now they have a low production, high cost product, so that works better for that. There are other businesses that look like that too, where you have a relatively low production, high cost product that you can do in sort of series production. And we’re seeing an incredible diaspora of companies in El Segundo California, mostly with SpaceX alumni, who are taking the same playbook of a vertically integrated supply chain and exceptional engineering to attack a premium product that can compete in today’s world.

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Akshat Rathi  10:30

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Like? 

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Mike Schroepfer  10:31

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There’s a company called Arc Boats that’s building electrified boats. Started with a pleasure boat and then a surf boat, and now they’re working on fishing boats, and now they’re moving to their electrifying tugboats. They make hundreds or thousands of them a year. It’s not 50,000, but they’re able to do so at a reasonable cost, in Los Angeles, they’re manufacturing the vehicles there. You have another company out there called Lightship that’s doing this for RVs, recreational vehicles. It’s a massive market. Turns out a lot of people in the United States have an RV, and they can build one that is electrified and better. You’re not running a generator when you’re sitting there trying to camp and be out in nature, which sucks. And then you go into big technological leaps like fusion — Commonwealth Fusion — in Devens, Massachusetts, sets the world record for magnet strength. They’ve got a magnet that, as Bob, the founder and CEO,  likes to say, can lift an aircraft carrier, it’s that powerful. And so really, that is dependent on a massive technical leap in innovativeness, which I would argue, the United States has historically been the leader in. And if we can make fusion work — just to put this in perspective: to power London, London’s about, call it four gigawatts of consistent power, about 100 gigawatt hours a day. So I did some rough math on the way here. To power this with Fusion, you need a couple of kilograms of fuel a day. So like, two MacBooks. I could fuel the plant and carry it in my backpack each day. It’s about a million plus, maybe 10 million times more energy dense than coal. So if we can crack that, yes, energy is a commodity, but I’m showing up with a totally different solution to that commodity, which is this super energy dense process that really relies on massive innovation. And that’s a place where I think betting on startups, betting on the west, is tractable.

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Akshat Rathi  12:13

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I mean, there is no doubt there is a whole bunch of innovation that has happened in the US that is now climate tech for the rest of the world. You didn’t go all the way back to the 1950s with the silicon photovoltaic cell that was invented in Bell Labs in America. You didn’t go to the 1970s when the lithium ion battery itself, even before we come to a cathode that does specific things, the first setup of a lithium ion battery was invented in the Nixon mobile lab. So this is not saying America can’t innovate, and we’ll come to what’s happening with science funding and how that might affect climate and tech investing. But it is true, there is an ecosystem to innovate. There is the brain power to bring these ideas into commercial opportunity, but then grabbing that opportunity and actually scaling companies has been rare. So you brought up an example, which is SpaceX, really good example in the space arena, a lot of that has been possible because it had government contracts, big ones initially, which required it to have a domestic supply chain, because that’s the requirement from NASA to be able to put on American astronauts into the space station. But then it’s been able to use that tailwind to actually become a commercial entity that does work for everybody and anybody. There are Indian satellites that get launched by SpaceX, but it needed that initial support from the US government to bring the company to a point where it is commercially, now, the leader. America is not doing that for any other sector. So LFP is a very good story of that. LFP was invented in America. A123 was a company that was going to scale up the battery chemistry, and then it got bought by China. And we know the story. This gets repeated multiple times. So as a climate tech investor, going into an early stage company, how do you think about scale when it comes to becoming a SpaceX? 

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Mike Schroepfer  14:14

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Yeah, this is where I actually don’t describe myself as a climate tech investor, because I think that that it is an ill posed frame of what this is like. These are hardware companies, typically. And so if you zoom out a little bit and talk about hardware and say, ‘all right, what are the big, interesting new hardware companies that have shown up in the last 20 or 30 years?’ I just talked about how I went to a company that went from zero to tens of millions of square foot of operating facilities all around the world in a decade. You’ve seen similar things happen at Microsoft, at Amazon, in both data centers and in their case, in warehouses and fleets of planes and trucks and other things. So if you just look at the largest companies in the world, they are predominantly American companies. And so I think there is an opportunity to grow and scale these things. It requires having a business model. You know, in Nvidia’s case, they have silicon and chips, the most extreme example of the companies that I think have a chance, which is, you concentrate a tremendous amount of human R&D into a product that I can put in the palm of my hand, and I can sell by the millions at very high margins. That is an incredible business, right? That is as good as it gets. And look at everyone in the world chasing that. For five years it’s been obvious that this is this amazing business. Everyone’s throwing money at it, and they can’t catch Jensen, right? And so once you get scale, it’s really hard to catch. I think there are very few businesses that are like silicon, but I think that on the other extreme, you have baseline commodities that are very hard, things like steel, concrete and cement and those sorts of things. And there’s a big space of stuff in the middle there that I think is really, really quite interesting. As a very specific example, so I’m not just talking in generalities, a bunch of big, boring equipment that you talked about on the show two weeks ago is transformers. These things take one voltage to another voltage, and they’ve been built the same way, roughly speaking, for the last 100 years. We’re right now, on a cost curve down on solid state transformers. And you know, they are getting costs down about 10-15% every year. They’re increasing in their efficiency. And so I think we’re just at the cycle now where I’m going to be able to build a transformer at a 10th the size of an existing transformer. There’s immense demand for these things. So we’re going to sell to everyone. There’s a company we just funded called Heron with an exceptional founder from 18 years at Tesla, Drew Baglino. I think that’s an amazing market. They are not going to be able to make enough of their product to meet demand in the early days, and they’re going to build a hugely differentiated product thanks to an innovation which is sort of power electronics and solid state, which is relatively new.

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Akshat Rathi  16:40

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There is one way to think about why energy innovation in America hasn’t quite scaled, which is for the past 30 years, energy demand has been roughly flat, and that is true of all energy demand. That’s true of electricity demand specifically, which is now starting to change. The demand, especially in the West, with Europe and North America looking to build data centers, but also electrifying their fleet, adding heat pumps. And there is something that growth does to the need for innovation and the need for market developments that a steady or a declining market does not do, right?

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Mike Schroepfer  17:24

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Yeah. I think that’s a really great point. And I would actually plus one that and say it even stronger, which is, energy access has become a boardroom conversation in a way that wasn’t true literally four years ago. So it is a top boardroom conversation, because if I don’t have access to energy, I can’t build the compute power I need. I can’t build the data services, the AI models, and I may lose out to my competition. And you’re seeing large companies, you know, Meta just announced yesterday a deal for geothermal with XGS. It was their second geothermal deal after Sage. Obviously, Google has been doing the same with Fervo. You’ve got most of the hyperscalers buying contracts for fission plants. It is categorically different to say I need more of it, or I can offer it at a better price versus getting access to this thing is the difference between my business succeeding or not, and so I’m willing to pay more, I’m willing to take risks on new, innovative technology. And that is a pull through, particularly on the energy side, that didn’t exist even a few years ago, that I’m incredibly excited about, and I think it’s enabling a lot of new innovation.

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Akshat Rathi  18:29

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After the break: are funding cuts in the US breaking the innovation pipeline? And hey, if you’re enjoying this episode, please take a moment to rate and review the show on Apple Podcasts and Spotify. Your feedback really matters and helps new listeners discover the show. Thank you.

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Akshat Rathi  18:54

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So a lot of your investments are in early stage companies. And the pipeline of innovation that is America, that creates with these early stage companies, is really strong. But we are going to see, and we are starting to see, already, heavy cuts to science funding, to health funding, to energy technology funding. How do you think that changes your ability to think about investing not next year, not in two years, but in five or ten years?

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Mike Schroepfer  19:27

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Yeah. I mean, I’m a deep believer in the power of science and research to accelerate our ability to build interesting things and solve problems. So I don’t really know how this is all gonna shake out, but if we’re doing less of that, then it is slowing down the pipeline of things I would say five plus years out. There was a talk yesterday and someone was sharing some research they had done, which said that for most things to go from a lab discovery to say 100 million commercial deployment, it’s on the order of 10 to 20 years. And so it’s probably not a five year problem. It’s more like a 10 or 20 year problem. But it’s still a problem. We do as a society, as humanity, need to be investing at all stages of innovation. I’ve been working in technology in some form for 25 plus years, I ask myself sometimes, ‘Why do I keep doing this?’ And whenever I’m having a bad day or bad week, I try to look back. 100 plus years ago, or a little more, it wasn’t safe to drink the water in London because we didn’t really understand how to disinfect it. Technology has fundamentally improved the human condition, and it is the vehicle by which we take difficult, zero-sum problems, ‘can we fund this, or can we fund that?’ And we come up with a solution that’s half the price, and we say, ‘Guess what? We can do both.’ And that is where I have dedicated my life. And I’m concerned about this, and I’m hopeful we can find ways to sort of get back to funding the basic research that is the sort of early fuel in this pipeline of incredible technologies to advance human prosperity. 

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Akshat Rathi  21:06

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So I’ve been covering venture capital investing in climate tech for a while now, and a lot of the money that goes into these companies tends to be American. A lot of the companies that are in this space tend to be American. With what’s happening on science funding, we are seeing places like Europe, but also China, Japan, even India, looking to boost science funding, looking to either attract some of the scientists who’ve left those parts to come back home, or to just give I mean, these are words that politicians have used ‘refuge’ to American scientists who want to do work. Would you start to see opportunities to invest more in those regions as climate tech investor? Are you tied to wanting an American company, or are you agnostic?

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Mike Schroepfer  21:50

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I will go where the great innovation happens. My current thesis continues to be that — and it’s not exclusively US, one of our companies is a French based company, Dioxycle, and I think they’re amazing, producing clean chemicals using electrochemistry. And so I’m not dogmatic about it. I do think, having built teams internationally all over the world, and built things all over the world, that America still is particularly — and particularly the west coast and Boston — is particularly unique in its ecosystem and ability to start things. I’ll tell you, when I started doing this work — I live in the San Francisco Bay Area — and I had a question of like, ‘Am I in the wrong spot? Should I be in Houston? Should I be in Boston? Should I be somewhere else?’ And I had sort of a point of reflection that maybe I needed to move to be where the action is. And it just turns out that the Bay Area in particular and Los Angeles are still the epicenter of startups. You can walk down the street and find someone who understands AI, you can find an IP lawyer, you can find a CFO. It just has the density of talent you need. People have been trying to recreate Silicon Valley, and we call them, you know, Silicon Alley, or whatever it may be, and it’s just hard, because you’re recreating an entire ecosystem. Now you can screw that up. You can mess it up over time. AndI really hope America doesn’t, because I think it’s a huge engine of innovation and productivity for the world. But for now, I think it is the preeminent place to do it. But again, I’m not dogmatic. We see a great company somewhere else in the world. I think there are brilliant people all over the world. I think India in particular is investing a lot, as is China and others. So I hope we see a lot of innovation all over the world. 

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Akshat Rathi  23:25

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Looking over the next three to four years, what are the things that you are seeking — companies to bring solutions in the climate tech space — that you would like your capital to go towards?

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Mike Schroepfer  23:38

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So we invest in everything, industrials, land use, carbon removal, all the rest of them. We have a pretty balanced portfolio of those things. But I would say, if you made me be focused, the two things I’m obsessed with are very simple: It’s energy and it’s AI for acceleration of atoms. Energy is pretty straightforward. There are new ways to produce low carbon energy, cheaply distribute it, store it. I think there’s just a tremendous amount of innovation, whether it’s fusion, advanced geothermal battery storage. I think there’s a ton of ways, tons of places where we can put batteries and things, because it’s cheaper, better, faster. You can do it in induction stoves, you can do it with lawn care equipment, you can do it in RVs. We’re just kind of getting started replacing all the gas stuff, all the diesel generators, with batteries. In fact, we just recently did an investment in a fishing company that’s building a micro-reactor called Radiant, and their target market is diesel generators. It’s a small reactor, it’s one megawatt, but in regions where it’s hard to get to, you have to ship diesel fuel there, and it’s incredibly expensive to do so. So you can actually build a cost competitive product by shipping a container that just produces energy for five years straight. That’s exciting. So I think energy, broadly, is super exciting. And then we’ve been seeing a lot of really interesting applications of advances in AI for, I would say, accelerating the scale out. The first wave of these companies were trying to accelerate discovery. So trying to use materials discovery or chemistry discoveries. And I was honestly struggling with those companies, mostly because I think, as you rightly pointed out, it’s the scale out that’s the really hard part of this, and I think 90 plus percent of the work and energy, and so you’ve got to go attack that problem. So we started poking at that problem, and we’re seeing a really interesting crop of companies whose thesis is, how do we get from idea to production faster and get through iteration and reduce testing cycles. We need to build a lot of stuff, any way you cut it, 5x the grid in the United States. How do we just do that faster? And I think that that’s actually a really interesting problem to solve.

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Akshat Rathi  25:40

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We have seen a decline in climate tech investments broadly over the past three years. This was before Trump, even. A lot of those investors came in because climate tech investing was hot, and now many of those have gone to AI because AI is hot. When you’re thinking about investing in companies, you always invest with other investors. How have you seen this decline play out? Is it going to be catastrophic because there are companies that are going to go bankrupt, or is it a good thing because people who weren’t very serious about climate are now not there?

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Mike Schroepfer  26:15

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I’d say first of all, the data I’ve seen, at least, is that overall funding in VC is down. And so, if you look at climate tech related to overall VC, it’s actually down less than overall VC. But in practice, what I’m seeing in the market is the more interesting question. And what I’d say is, there was a time in 2020 and 2021, where we were seeing deals come through with very fast markups, very short diligence, what I’d call sort of non-ideal conditions to do a rigorous diligence for an investing process. That, I didn’t like. We’re now seeing more rationality. We have more time to look at deals and understand them, really get to know the founders, understand the economics and the technology. But we’re seeing many, many companies getting oversubscribed rounds, meaning that they have more investor interest than they need. And I think it’s almost a bifurcation, where you see companies in the market struggling to raise because they maybe had too high a valuation, or maybe the economics weren’t as favorable as they thought for the business. And I think the ones you’re seeing do really well are exceptional founders with a product that has an entitlement of a better, faster, cheaper, and people just want it. And those rounds are going real fast. So it’s a tale of two companies, in many cases. I’m sure there’s founders listening to this, struggling to fundraise. And, look, I started my first company in 2000. I remember that. It sucks, so my heart goes out to you. But I think there is still an appetite and capability to fund companies out there.

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Akshat Rathi  27:37

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And then the other thing that venture capitalists tend to say most of the time is that, ‘look, we invest in companies because they’re great ideas and not because they are getting policy support or government incentives. And so, whatever happens with the government, we are trying to not be affected by it.’ But that is only half true, because a lot of the markets that need to be created with climate tech products need to be created by producing stuff that is initially expensive and has to become cheaper by giving people incentives in the form of government subsidies to make that product cheaper so that people can use it. That policy is, certainly in the US, going away. And so you’ve got these two tracks, I would say, in climate tech. There’s mature industries — we talked about solar, wind, batteries, electric cars — that’ll continue to grow because they’re mature, because the price point is where it is, and companies are going to make profits making them. And then there are a whole bunch of immature technologies. We talked about fusion, but also hydrogen or carbon capture, point source carbon capture or carbon removal, which requires companies to actually buy offsets, which at a voluntary scale, they can buy somewhat but if you have a regulatory market, like here in Europe, then you actually have scale, and you have actually a market pull. So with policy going away in the US, what do you stop investing in??

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Mike Schroepfer  29:10

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Well, it’s not… I think going away is, I would say, too big a statement. It’s changing, and aspects of it are going away. And I think what we had was a fairly broad set of programs investing in a lot of stuff across the board, and what you have from the government’s perspective, and what you have is a much more tailored, targeted set of things. So yes, hydrogen is challenged. I think carbon removal is challenged. I think if you look at the fission market, it’s actually turbocharged at this point. The administration is making room for regulatory approval on others in a way that didn’t happen before. So I think it’s quite simple. We’ve got to do our homework in terms of the conditions in the market, and if the market is being supported by some sort of policy or regulatory sort of tailwind, we just do an analysis on, like, ‘How stable is that right, and how likely is that going to be to continue?’ We don’t typically invest in anything that’s dependent on legislation that hasn’t already passed. So you’re really only just looking at, okay, are you dependent on things that are on the books today? How stable are those? I tend to be skeptical of, for example, even things that are on the books where we haven’t really felt the impacts. Like it’s going to create an economic burden on people, because those things tend to get pushed out when you get real close to them, because people don’t want to pay. And so I still think it’s a much more nuanced analysis of all of these things. But fundamentally, there’s massive energy demand. If I’m producing electrons faster or cheaper, I’ve got a great business. It’s usually one company that transforms an industry like, I think fusion is going to happen because of one or two companies. I think Heron is going to transform power electronics. I think Mill is going to solve more food waste problems than any company ever in history. I think you’ve got the shot that when it works you kind of replay history without Nvidia, right? Or that without Intel and you’re just like, what would it look like? We don’t have to get them all right. We just have to get a couple of the ones that are world changing, and that I’m hoping will be the coalignment of massive climate impact and some interesting financial returns for our investors. 

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Akshat Rathi  31:08

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So we talked a bunch about climate investing, but you started with climate philanthropy, and you continue to do that. Where do you see the difference between investing in an idea that’ll make money, versus investing in an idea because it needs to exist?

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Mike Schroepfer  31:20

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That’s a great question. I think there’s a fairly clear line, at least in my mind, and the way I think of it is quite simple. I think philanthropy, at least for me, is really effective at early stage science. We talked about this early innovation and policy work. It’s a place where you don’t even know if it’s gonna work. You don’t know how to make money on it. You’re just trying to increase our understanding of different things. So there’s some really promising carbon removal pathways, one called ocean alkalinity enhancement, which is a way to supercharge something that happens naturally in ocean chemistry. And the first question is like, is it safe, is it effective, and how much does it cost? And the answers to that are frustratingly broad. But in that broad range, if you hit some parts of the target, it may actually be the cheapest, most scalable form of carbon removal. I think it’s a great place for us to go do science and say, let’s go try to answer those questions. And let’s answer them with rigor and intelligence, without trying to worry about whether we’re gonna make money on it. And let’s try to write some papers. That’s a good use of philanthropy, I think. For a lot of things we’re talking about, where it’s solid state transformers or solid state electronics, that’s just at the point now where I think it is crossing the commercially competitive line. It was too expensive and not reliable enough. And I think we’re just getting to the point. So we’re about a year or two out from, I think, major commercial deployments. That’s a great place for a company, because you’re trying to scale something out and trying to make money doing it. That’s where I think industry works really, really well. 

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Akshat Rathi  32:50

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You’ve also given money to ideas in philanthropy to try and deal with impacts that are coming our way. So we’re going to see sea level rise. You’re looking to give money to ideas that will help us deal with a problem that is kind of baked in. The models are quite uncertain, but we do know, even if we meet our climate goals, sea levels will continue to keep rising for hundreds of years to come. Why is that a problem that you are putting money in as a philanthropy, rather than stuff that governments are supposed to do? This is basic research. This is good for society. This is good for all countries, not just for one specific country. So every government should really be keen and investing in this, right? 

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Mike Schroepfer  33:33

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The honest answer is, I don’t know why other people aren’t doing it. I think one of the things I’m pretty good at is finding the white space. And so why I ended up here is like, for whatever reason, people weren’t. And you know, as you start peeling the onion on it, it gets worse, not better, which is: our models for sea level rise are pretty rough. You’re talking about hundreds of years. Let’s talk in the lifetime of our children. That’s 2100, it’s not that far away, it’s 75 years. Models say somewhere between 0.2 and 2 meters of sea level rise. That’s really problematic for Miami and New York. And so the first question is, can we better answer that question? And that’s, again, a place for science to do work. And it’s not actually that expensive to go do that work. And then the next question is, if it’s as bad as we think, besides building sea walls, is there anything we can do to slow this down? And I think that, again, it’s a good scientific question to ask. And I think it’s worth just framing this again, as all this climate stuff can feel really abstract. We talk about models and 1.5C and I think about this in terms of people. We’re talking about islands underwater. We’re talking about people being displaced. So, I care about the impact that these things have on people in our lifetime. And the question is, how do we better understand them and better prepare for them and hopefully prevent or mitigate them? That is the thing that sort of underlies everything I’m doing.

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Akshat Rathi  34:40

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Thank you, Mike. 

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Mike Schroepfer  34:45

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Yeah.

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Akshat Rathi  34:53

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And thank you for listening to Zero. Now for the sound of the week. That was the sound of a highland cow burping while having its hair brushed. Burps produce the vast majority of methane emissions from cow rearing, and are one of the many sources of greenhouse gasses that companies are trying to reduce. If you liked this episode, please take a moment to rate and review the show on Apple podcasts or Spotify, share this episode with a friend or with someone who loves steak. This episode was produced by Oscar Boyd and Eleanor Harrison-Dengate, Bloomberg’s head of podcasts is Sage Bauman, and head of talk is Brendan Newnam. Our theme music is composed by Wonderly. Special thanks to Jessica Beck, Sommer Saadi, Mohsis Andam, and Siobhan Wagner. I’m Akshat Rathi, back soon.

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