Posts from climate crisis

Electrified cars were greater than 10% of the US market in 2021 and EVs were about 5%. EV sales are growing at nearly 100% YOY and could reach 25% of the US market in a few years. This is good news for the effort to reduce our dependence on fossil fuels. But there are still challenges for the EV market.

Range anxiety and charge times are among the top reasons that consumers avoid EVs.

The Gotham Gal and I have owned EVs for eight years now and have struggled with a few of these issues. But we continue to buy EVs and prefer them to gas-powered cars.

This past weekend, we took a five-hour road trip with our brother and sister-in-law. We each drove our own cars, both EVs. We drove our eight-year-old original Tesla Model S. They drove a Volvo XC40. We ran into a number of challenges that led us to call this road trip our “range anxiety weekend.”

The first issue that arose is that our destination was slightly beyond the range of both of our cars. We needed about 250-260 miles to get to our destination and we both had about 240 miles of range. So we selected a stop for lunch that had EV charging stations.

Fortunately, when we arrived for lunch, both charging stations were free. They were the only charging stations that we could find in this small town. If either had been taken, we would not have been able to charge during lunch and would have had to go on a charging station hunt after lunch.

We had a leisurely two-hour lunch and when we got back to our cars, we had each gotten another forty miles. That was enough to get to our destination so off we went. We did get to our destination with some spare battery but both of us were below twenty miles when we arrived.

The hotel we stayed out told us they had EV charging stations, but it turns out what they had were two Tesla charging stations and we could not find an adapter to charge the Volvo XC40 on the Tesla charger. So the Gotham Gal and I charged our Tesla both nights at the hotel but our brother and sister-in-law were not able to do that.

The next morning we went on an EV charging station hunt and found an Electrify America fast-charging station which took the Volvo XC 40 from empty to full in about two hours. We left that car charging for most of the day and toured the area in our Tesla.

We charged our Tesla again overnight at our hotel and we both had full batteries for the drive back. We picked another lunch destination halfway home that had charging stations and started the trip back.

While the lunch destination on the way home did have both Tesla and non-Telsa chargers, the charging rate was so slow on them that we were not able to get enough additional mileage over lunch to make it home. So the Gotham Gal and I headed to a Telsa Supercharging Station and in about ten minutes got another fifty miles and then made our way home.

Our brother and sister-in-law had to find a fast charger in town and did but it was not easy. And it took a fair bit longer for them to get the extra fifty miles they needed to get home. But get home they did and the range anxiety weekend ended without any major issues.

But here is what we learned from this trip about the availability of charging stations on the road in California:

• When hotels and restaurants say they have EV chargers, they mostly mean Tesla proprietary charging stations that you need an adapter to use if you are driving something other than a Tesla.
• When you are on the road, you need fast charging stations. The slow variety, which is mostly what is out there, only work for an overnight charge. So they are OK for a hotel but not for anything else.
• Tesla has done an incredible job with their supercharging stations. Range anxiety is a signficantly reduced issue if you drive a Tesla.
• While Electrify America is doing a nice job of buildling out fast charging stations for non Telsa EVs, their charging stations are signficantly slower than Tesla’s superchargers and they are not nearly as prevalent.

Given that range anxiety and charge times are among the top reasons that consumers don’t purchase EVs, it would make sense for the automobile industry to come together and standardize charging outlets and invest heavily in fast (super fast) charging stations. Telsa can likely get away with its own charging network and charging outlets, but everyone else cannot. I don’t understand why this is not a bigger priority for the industry. It needs to be.

So last year I made a bunch of predictions that with one exception were kind of obvious. I don’t want to do that again, so I am going to list five things that I think will happen this year that most people would not likely agree with.

1/ As the pandemic evolves into an endemic in the first half of 2022, companies will reopen their offices and their employees will largely opt to go back to working together in offices.

I qualified this with “largely” because I don’t think we will go back to everyone in the office again. Companies have become much more comfortable hiring remote employees who don’t live near a company office. Employees have made it clear that they want/need the flexibility to work from home a day or two a week. Some companies have moved to an entirely remote work environment. But I think the dominant form of working will return to “in office, with others” by the end of this year.

2/ Carbon offsets, effectively a voluntary form of self carbon taxation, will take off in 2022 and by the end of the year, we will have a global market in excess of $10bn (up ~10x in 2022).

I think the big unlock will be bridging between the existing carbon offset market and the crypto markets where decentralized finance tools can bring massive innovation and demand to this market very quickly.

3/ K12 systems around the US (and around the world) faced with teacher shortages and desperate to erase several years of learning shortfalls, will increasingly adopt online learning services in the school building in lieu of and in addition to in-class learning.

This may be obvious. I don’t really know. But there are many forms of learning that work in addition and in compliment to teacher-led classes and school leaders will need to be open to using them aggressively to turn around several years of learning losses.

4/ Twitter opens up its APIs and allows anyone to operate Twitter clients that compete with its own.

Now I am going out on a limb. But why not? That would be so amazing if it happened.

5/ As I predicted back in the spring of 2017 [8:30 into this video], only five years too soon, Ethereum’s market cap will surpass Bitcoin’s in 2022. I hope I get at least as much abuse for this prediction as I did for that one.

Ethereum’s merge in 2022, combined with the understanding that productive assets must be worth more than non-productive assets, make this a fairly obvious prediction. But I got it wrong last time, so I surely can get it wrong again.

I hope that 2022 brings us more positive surprises and less negative surprises than the last two years.

Happy 2022 everyone!

As is my custom here at AVC, I like to end the year looking back and start the year looking forward.

This post will be the look back and I started by revisiting my look forward into 2021 that I wrote on New Year’s Day 2021.

In my typical optimist fashion, I was dead wrong about how quickly the pandemic would fizzle out. I predicted that vaccines plus immunity from those who had been infected would end the pandemic by mid-year 2021. That was obviously totally wrong and I am sitting here isolating with my own Covid case (seven days in now). I can’t imagine a more appropriate “punishment” for getting that one wrong.

I got the rest mostly right and when I look back at 2021, what I see is a world that is changing before our very eyes; becoming more digital (leading to metaverse fever in tech), less tethered to a job and place to work (and live because of work), warmer, more prone to natural disasters, and tribalizing along different dimensions than what has divided us in the past.

In truth 2021 was a deeply troubling year and no wonder that mental health issues abound among all of us, but particularly our young. Nothing seems right anymore. We must face that and then fix it.

Of course, 2021 was a great year for the financial markets, both stocks and blockchain assets. Even with a big year-end selloff, which I believe was mostly tax-driven (we will see soon if I am right about that), investors who owned tech stocks and blockchain assets saw huge gains in 2021. USV was no different. We had a banner year.

But that also means that it is on us who have benefitted the most to work harder and invest to address some of these troubling issues. We are doing that with our first climate fund, which we have been investing aggressively and we hope to have a second one to invest before the end of 2022. We are seeking to both invest in technologies/companies that can mitigate the climate crisis and that can help us adapt to the changes that are permanent and we must accept that many will be.

I want to return to the pandemic before I wrap this year-end post. Sitting here with a mild case but isolating so I don’t pass it on brings home for me that our society has really struggled to find the right balance between what is right for the individual and what is right for society during this pandemic. We can’t agree on anything. Vaccines, masks, lockdowns, schools, offices, etc. Those who have a high tolerance for risk believe that we have gone way overboard in trying to manage this pandemic when we never could. Those who believe in government, public health, etc, believe that those with a high tolerance for risk are putting all of us at risk. And I think the truth lies somewhere in between. This pandemic is a metaphor for the broader inability of society to find a way to move forward together.

Beyond climate or covid, it is this plague of dissension, doubt, fear, disrust, hate, and worse that is our biggest challenge and one that is very much raging across our world right now. That’s what 2021 brought home for me.

I used to ride a Vespa around NYC. I rode it to work and back for about ten years, from roughly 2003 to 2013. I stopped riding it when Bloomberg’s Traffic Enforcement people starting towing it when it was parked between cars on the street (something I had been doing since I started riding it). A few visits to the tow pound will do that to you.

Since then, I’ve been Citibiking to and from work when it is nice out and subwaying when it is not. That has worked fine.

A few weeks ago, I had breakfast with my friend Alex Ljung, who co-founded our portfolio company SoundCloud with his friend Eric Wahlforss. Alex and Eric are back at it with a new company called Dance which makes a beautiful e-bike that is sold via a subscription service, currently only in Berlin, but coming to your city sometime in the future.

I told Alex that I was nervous about riding e-bikes. He told me to get over it and get on one. So I have been doing that, using Citibike’s e-bikes, for the last few weeks.

Alex was right. I love riding e-bikes around NYC. I can see riding them out to Brooklyn and back for meetings, using the new Brooklyn Bridge bike lane.

I still like riding my traditional bike for exercise, something I do three mornings a week, and something I will do when I finish this post.

But for getting around NYC, in the awesome bike lanes that have been created all around our amazing city, I think e-bikes are the way to go. I put in an order for one this weekend.

I’m sold.

I recall when my partner Brad and I were raising our first USV fund, back in 2003, and potential investors wondered about my blogging habit. They asked if I was making a mistake telegraphing our investment thesis for everyone to see, including our “competitors.”

We strongly defended the practice and explained that the benefits of telling the world what we were looking to invest in, and why, strongly outweighed any costs. We explained that telegraphing would bring entrepreneurs to us.

And that turned out to be the case. So many of our top-performing investments over the years came to us because of our telegraphing strategy. It is hard to know who is working on a problem you are interested in. But if you put the word out far and wide, they will find you.

I was reminded of those conversations almost twenty years ago now when I read this post on USV.com by Hanel outlining our interest in measuring carbon. She explains that we have made one investment in that area already and are looking to make more. And she explains why.

I am sure that Hanel has already heard from a bunch of founders working on measuring carbon and will hear from more in the coming weeks and months. That’s excellent and how it should work in our view.

Rocky Mountain Power emailed me last week and offered us a “100% Solar Match” which means that we can “match” all of our energy consumption in our home in Utah with power from their 20 megawatt solar plant in Holden Utah.

This doesn’t mean our home will be now be operating with energy from that plant but it does mean that we have opted for 100% solar. If every Rocky Mountain Power customer opted for this match, they would have to build more solar plants and decommission carbon based energy facilities.

There is the question of how Rocky Mountain Power could operate an all solar grid (they can’t as far as I know) and whether most customers care enough to specify what kind of power they want to purchase.

But I found the experience simple and easy. One phone call and I was cut over. And now I feel better about the energy we consume in Utah.

It does feel like a bit of a gimmick but it’s a positive one in my book.

My partner Albert shared this article yesterday which suggests that the price of carbon will have to reach $150/ton by 2030 in order to create the conditions for the world to get to zero carbon by 2050. The current price of a ton of carbon on the EU’s Emission Trading System is about $60/ton and you can buy carbon offsets for much less than that although you may be purchasing junk credits if you are not careful.

If you bought carbon today at $60/ton and held it until 2030 and sold it at $150/ton, you would get 2.5x on your money and a roughly 11.4% annual rate of return. If you can figure out how to buy carbon for a lot less than $60/ton, then your returns could be a lot higher.

It is increasingly obvious that the world will need to get off its addiction to carbon in order to stave off very serious climate impacts. The path to doing so is fairly clear but will be expensive. This chart from our portfolio company Wren’s website shows how we might get there:

The bet on the price of carbon is a belief that the world will choose to eliminate its addiction to carbon over the next thirty years and that one way or another carbon emissions will become very costly and carbon capture will become very profitable.

If you believe that will happen, you can profit from it by investing in the price of carbon. There are many ways to do that and some will be more profitable than others. But a “macro bet” on the price of carbon feels like one of the strongest ones out there right now.

We had a situation recently where a rooftop solar project on a building we own became too expensive (because of NYC Fire Department requirements) and it no longer made economic sense to do the installation. And yet we want to avail ourselves of solar energy to benefit from the economics of solar, to reduce our carbon footprint, and to increase the resiliency of our property.

So we are reaching out to some community solar developers in NYC who have built out solar infrastructure that the community can participate in.

I’ve been interested in community solar for a while now. It makes sense to me that a group of people can build and participate in a solar installation where it most makes sense and then share in the energy that installation generates.

Community solar works best when a consumer can receive a credit on their electrical bill for their community solar output. This is possible in the states that have deregulated their electrical systems.

At USV we think community solar represents an interesting way to participate in the renewable energy business and we are looking at a few opportunities now and would like to look at more.

As USV is now about six months into investing our first climate fund, I am starting to see more clearly what climate investing is all about and my partner Albert said something in a team meeting earlier this week that really stuck with me.

I did not write it down but it was something like, “we’ve spent two hundred years taking carbon out of the ground, burning it, and putting it into the atmosphere and what we now need to do is get it from the atmosphere and put it back into the ground.”

That is a simplification of the many technologies and projects that are underway to capture carbon and sequester it, but I am a fan of simple. In investing, the simpler the better for me.