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Fred Wilson and Albert Wenger Interviewed by Erin Griffith | Upfront Summit 2020

Fred Wilson
Managing Partner at Union Square Ventures
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Upfront Summit 2020
January 30, 2020, Pasadena, CA, United States
Upfront Summit 2020
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Fred Wilson and Albert Wenger Interviewed by Erin Griffith | Upfront Summit 2020
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About speakers

Fred Wilson
Managing Partner at Union Square Ventures
Albert Wenger
Director at goTenna
Erin Griffith
journalist at New York Times

Albert Wenger is a managing partner at Union Square Ventures. Before joining USV, Albert was the president of del.icio.us through the company’s sale to Yahoo and an angel investor (Etsy, Tumblr). He previously founded or co-founded several companies, including a management consulting firm and an early hosted data analytics company. Albert graduated from Harvard College in economics and computer science and holds a Ph.D. in Information Technology from MIT.

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About the talk

Topic: Business

Union Square Ventures partners Fred Wilson and Albert Wenger talk with Erin Griffith (The New York Times) about the firm's investing thesis to solve the climate crisis. Topics covered include:

- The firm's entry into climate technology and recent portfolio investments

- What the firm looks for in climate technology sectors

- How capitalism can co-exist with climate solutions, and the role for government

- Why there's reason for optimism

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Hiram I'm Aaron Griffith and the writer for the New York Times and I have with me Fred Wilson Albert Wenger from Union Square Ventures. We're going to talk about climate. So I start with Fred every year you write a blog post predicting what you think's going to happen in the next year and this year. You're number one prediction was about climate and you acquainted the climate crisis to bigger and more impactful than the two World Wars. So that's pretty dramatic. You start by explaining what you

mean by that? Well, I think I equated them to the two World Wars. I'm not sure I said they were bigger, but we can go back and look at that. I was I was trying to be dramatic. I was trying to say that I think that the climate crisis is to this Century book thing. In the future when we look back at the Centre that'll be the defining thing that the humanity did to do. If your venture capitalist you have to be an optimist and what about it in particular? I mean, like I just think we have we have to solve

this problem, you know, we built the modern economy on carbon and we have to stop and we know how to stop and we just have to do it and it's going to be it's a it's a political problem. It's a technological problem and I think that It's also a fantastic investment opportunity. I'm going to get a lot of people liked it. You know, I think I I think being controversial. People like that like saying things that you know get people's attention. I think that that's generally a good thing to do.

So Albert when you talk about when did you personally wake up to the climate crisis? Weapon giving all these talks about attention Yuma detention and how we have this problem that we're paying attention to all the wrong things and I were spending all the time growing our Facebook feeds and explain all the time New Wave all these phds optimizing ass so we look at things and by think that we don't need a doctor and so I kept talking and I said, well, there are two examples of things that

were not paying enough attention to individual purpose. Like what's my purpose in life example to its climate crisis and I kept up on it and it's the kind of topic that more you read the more you realize. Oh my God is so much bigger and so much more severe and so much more imminent then we all play. Our kids worship off three other things. I feel like a little bit like I kind of dragged them into this you'd still like your generation is ruining the world for my generation. By the way, I do think that the younger you are a perfect example

of this the younger you are the more pissed off you are about this, right cuz I think there's a chance like you look at this thing like it's going to be really bad by 2050, right? You know, you're doing the math 90 then you know, I could have dead by then. So I think that this is the younger generation in my in my family is really pissed off about this. When did you guys needed to be part of the solution? We had a big conversation in the partnership about what are the kind of think we invest in and is this an opportunity we could invest in and it's not

like the first time we did that we had our first 10 years ago in a company that was called Amy, which was an acronym which stood for avoiding mass extinction event. And what's that company did was help we didn't tell anybody what it's good for. What that company did was it helped other companies track carbon in their entire supply chain so that he could serve say this product represent this amount of embedded carbon and it was really interesting than 10 years ago. Everybody wanted to talk to this company and nobody wants to buy these people had other priorities and what

feels very different today so they can get other investors excited about it. No because we couldn't get customers to pay customers were like, this is really interesting in the CSR department or some other department would meet with the company. But then when it was time to write a big check to subscribe to the software people like, you know what it's not that important now and in 2020 is that because of Greta at other people because of these movements because of Alton with the climate is actually done this just a much bigger awareness and also much

more play. Will to do things like carbon taxes, if which there are bunch of Europe already climate-tech without bringing up the word cleantech and talking about those sort of cleantech boom and bust of the early 2000s. I mean, that's a huge black. I think a lot of people lost a lot of money on that including a lot of LPS and you know what lessons have we learned from that and more in depth about what is different now into the climate crisis and it's becoming ever more apparent that something needs to be done. I would say, you know, if he's separate

out individual benefit from social benefit benefit for a moment what people did at the time was the right thing to do and it has the gave a huge boost to think that we not benefit from so if you look at their career for example on photovoltaic some p d panel a lot of that kickoff happen from Take Investments investment, which may not have returned money. But which got the technology going so that now we can put in a community solar and it's one of the fastest way for now meaning guess today. Yes. Thanks. You can make electricity from the Sun solar electricity

much much cheaper than a decade ago or so the huge telkom boom and bust in the late 90s, right? Most people lost money on steel Axe and all those kinds of big Telcom bill down, but that's really what built the commercial internet in like that's what we've been benefiting from that now for 20 years because all those people lost all that money. So I actually think that that is his butt, but I think that's almost every technology cycle is that there's this Early enthusiasm this way too early people get way too

excited to put way too much money into it and is losing money, but they did feel something and then we can I get the free uses all that or big enough for free, but we get like basically does the financial benefits of that investment do accrued to society overtime. Do you think people know more about LPS climate and thank God. No, please. No, we've not heard that we pretended to be meeting in November and I think everybody understands that this problem is really just massively severe. I think they'll gross give this analogy yesterday. So some of you may have heard it before but the

excess energy that we're trapping in the atmosphere above the pre-industrial Baseline is for Hiroshima size nuclear bomb every second. And so once you wrap your head around that have an absurdly large number if you serve imagine for a moment that you had these alien spaceship hovering and dropping her for nuclear bomb 2 seconds to the atmosphere. We would literally drop everything else and just try and get rid of them. This is what Independence Day the movie is about and so I think people are not recognizing that that's what we need to do. And I think because again this

earlier Investments were made now. We have a whole set of Technologies available to her cell phone battery storage tube at the cost of battery storage per kilowatt-hour I think coming down and then ink amazing rate. So now it's no longer question. Do we have the technology is more of a question. How do we get this much more widely deployed and how can we accelerate the broad deployment of the thing ology the climate space which way which is how we rebranded cleantech or Green Tech

lost money. All those failures like they just paved the way like, this is the this is a good it's part of our skill set. Cc's are great at narrative. So why don't you call about the story? The story is with big humans Tech read that book. We like a good story. Give me a little hope. It's very gloomy out there so that you guys you guys recently made a place. Where are you as an individual can buy offsets for carbon that you are admitting and that you're not going to be able to do much about so freak sample at 3 seeds. We travel a lot like we came here on their planes

those airplanes are not going to be carbon neutral anytime soon. And so when you know that you have a certain amount of carbon footprint, we know how to take carbon out of the are the most effective way to take carbon out of the areas to plant trees. One very effective way and so will on Project Grand you can so stay here to my carbon footprint and I want to give money to this specific project. So often some gotten a bad reputation large part because it's a wizard of a very almost Shady industry where people were spending money and it wasn't clear whether that money was actually doing

anything today. And they were literally examples where people were collecting money that they said was going towards the plenty of trees that just went into their personal pocket weather examples of people saying we do this methane capture and it was actually happening. So project rent Ames to bring transparency to that and the second is can pick up leap energy. Do you want to play something super important? It makes the energy grid accessible through apis to the software developers can build applications that do things like the man responds to man

response is basically when you are Energy company says to you I'll give you a lower energy bill if you promise not to use a lot of energy between 10:09 and 5, right? So any software applications to help people like us actually, you know, you know deliver on that promise and that's one example, but the energy Grid is not that programmable, but it's kind of you know, fifty-year-old, you know technology and so leave makes does all the hard work leap does to the world of the energy

grid to build the apis a software developers need to make applications solution. We're going to back new technology that's going to help us with all this time of Crisis where there are a lot of exciting opportunities out there or were you kind of casting about like we need more know there's a ton of activity in one of the things we did is when we announce those Investments, we also completely open first all of our research, so we wrote a blogpost in the blocks with links to all our research because we believe that this there's tons of

activity entrepreneurial activity there. A lot of people would talk about the generational shift a lot of people like this is the problem that I want to tackle and so Lots of other funds should invest in this be a lot of other funds are investing in this field. And so we wanted to share the work we had done so that other people you don't conserve built on top of that. Not yet. I think there's a Survivor rapidly. This is a topic that I think lots of funds are coming to very quickly now

cuz of companies like leaf and others more more solutions to me. Yes, we need the basic fundamentals of better ways to produce energy and you know store energy in hard technology, but also I think software is becoming more and more a piece of the solution set and that's something that we know how to investment. So I think you will see most of what we do in climate will be software based businesses, but it sounds like it has kind of deals are there other funds that are very well set up to

invest in deep take for example in next-generation batteries, and we absolutely need that also and and What's at the hundred billion dollar investment in a battery company announced? So I think it's very encouraging that we need both these vectors. We need to sort of take the stuff that already works and deployed much more broadly. I mention community school earlier. So one of the great ways to deploy solar isn't for every house to try and have their own panel. They cause your roof probably doesn't face the right direction and so forth. But if you get a bunch of people in the local community

together and they say we're all going to buy solar electric power from this new solar field, then you can put a feel like right outside of town and you can power the entire town or big part of the top that is the fastest growing deployment of solar in the u.s. Today, but that need software support and that needs skin people need to sign up the need to connect ammeter and so there's infrastructure that needs to be built to accelerate that type of deployment the only area of the cleantech that actually did make money or software company.

I guess we'll just take a little bit of a hardware 1/2, but it'll be interesting to see what kind of people come to fill that void. So excited about and what areas do you plan to avoid as far as Writing checks in inclimate. Well, so because our friend is relatively small is a $200 early-stage fun. We tend to stay away from things that are going to be super capital-intensive. So for example, we won't make an investment in nuclear fusion, but as a personal investment, I've made a person so there's things that we can do

with the fund and then they think that we can do personally in there but they're quite different because every fun is set up and structure to address a specific type of problem in the blog post that Albert rhoton usb.com where we serve announce that we're doing climbing investing. There's a link to a deck and in that deck it list all the different sectors that we think are interesting and there's like seven or eight but also draw through a nice old box around here thinks that USV isn't set up to do Well, first of all, we have a commitment to our

existing investors to do the thing that we do and we think there's plenty of opportunity to do that and other people have raised funds, you know, dcvc Lux capital a lots of people with big funds to do hard tech investing and so, you know, I think the way to think about the climate crisis is of a problem that is a huge proportion that if we all do a little bit that's how we make progress has its I think how we fail it if we go up that's somebody else's problem. I don't don't need to do anything here. There's nothing I can do with whatever like we can do lots of

things with individuals. We can offset our carbon we can contribute to climate activist and we can vote really important thing vote for candidates to take climate. Seriously. I'm so everybody can contribute. I think that's part of the message here. Even if on that small like humans Ventures confined areas where we can make an important contribution. So there's no excuse for some reason. Well, I don't know how to invest in this. If you are an investor, you put your mind to it. You will find interesting things to invest in

anybody but Trump candidate out there anything you like except that you guys are and I'm thinking like I would like to do something. I would like my business to be contributing to the solution. Do you think that Founders and investors need to have some kind of experience and expertise in this field? It's it's very technical and a lot of parts or do we need more disruptors with completely fresh thinking who can you like completely turn things around? Thrift Lawton who started to believe

it had no background in Communications. He started twilio because he was frustrated that he could couldn't get good telephony for his prior business. So I think obviously it takes take a logical know how but also take people who have passion who are who want to solve the problem and who bring you perspective to it who would like 12 I'm going to try something new and different. So I think it takes the Confluence of all of those Preparing for this was a lot of critics to her kind of saying that this sudden VC and trust and climate is kind of a cynical cash-grab. What what

would you say to them? In what way can ascribe meaning death over fear? Over here over an opportunity. Don't understand the complaint. Yeah, it's just that like, okay. Well, this is a visit of moral emergency and here are a bunch of money people coming into sort of profit. I think that as Albert said government's got to be a piece of this and Society has to work to to change the way we do things. There is a role for capitalism to play there is a rule for investors to play and you know what I think

you know, do we feel badly that you on musk made a lot of money proving to the world that electric cars are viable. I don't I think you know, he's a hero in that way. You know, I think that if we had waited for the existing automobile industry to get this electric cars were so wouldn't have them so, you know, I don't want to no. No, we did not I don't want to be like, you know, a rabbit celebrating capitalism because I don't think of capitalism solves all problems, but I think capitalism

can solve some problems. We need it and it's diffuse mint and we need regulation and we need both. Something that happens in climate a lot as few people wind up getting locked into these either or discussions. It's like, you know them people like we should only build nuclear reactors because we know how to build those until work even at night when the sun isn't on and so forth and then people like never built in a nuclear reactor who should only do solar and then if people like it should all be the government and we should, you know not have any it's just it's too big a

problem we need to do all of the above and we don't have any kind of luxury of picking here and I don't think there's any kind of moral failing for people to allocate capital and make money on something if it's also a real problem. I think there's been a lot of debatable investment. Like let me put exhibit a juul for example, like it's very debatable that that is a moral way of making money right to basically get a lot of new people addicted to nicotine who weren't previously addicted to nicotine, but I do think there are not every investment. Can take a high ground, but if you

can invest in something that clearly solve the problem and then people make money, I think that's totally okay. This idea of like have I'm calling it a purity test essentially that if you want to speak out on an issue like climate than you yourself can't fly in a private jet or you shouldn't be eating me use your metal straws all of that. I love to hear your thoughts on that. I don't buy private out of moral. Yeah, I just have a hard time. I mean, I've done it a few times and you're sitting in a plane. And there's two pilots up there, right and you're flying and you're the only person in the

plane in the more that you know, you read about how the the meat industry is one of the you know, biggest, you know Critters of issues. You know, it makes me think twice before going out and eating meat. I haven't given up me but I will tell you that my New Year's resolution this year is to try to eat meat only 20% of my meals, right? So I'm not saying I don't feel it was a purity test. I just feel like it's like I need to behave. Consistent with what I believe and

I think I don't want to hear it's Marshfield Behavior change is going to require government regulation. So if you look at smoking, for example, it was when government started to really tax cigarettes that we made a huge sentence how many people smoke so I think everybody needs to make their own decision what they think is hoof behavior that there are personally okay with but if we want large-scale Behavior change, we need a carbon tax, and we need to maybe band some forms of omission all together.

Actually creates this false sense of having done something when in fact, there's no systemic change happening and I might want to add one thing. It's okay to be concerned about plastic. The Plastics are complete rounding error Plastics are not the problem CO2 and methane in the atmosphere of the problem. So there's a lot of stuff that can be done in sustainability and it's all good and important. But if we don't solve the greenhouse gas problem that will kill us all That's kind of Graham. I like to see when we saw the

greenhouse. We will work on the cross. Yeah, I mean, I think you can kind of feel helpless about it and it's like not going to make a difference. So what are you think about the cause for optimism here is that we don't need to invent something magical that we don't have today. It's taking everything that we already know we know how to build electric vehicles. So we need to retire gas-guzzling Carson replace them with Eevee's we know how to make homes built homes that have a much smaller

energy need so we need to build new homes that way when you can retrofit existing home. We know everything we need to do. It would be great. If we had Fusion will be wonderful for many reasons. We probably won't have it for a decade or so, but we don't actually need Fusion to solve this problem. We can solve it. We also know how to get carbon back out of the atmosphere. We spent the last two hundred years to can carbon underground burning it and put it in the atmosphere. We know how to get it down. We can plant a lot more trees this people planting trees from drones. Now,

there is lots of effort to serve say can we take biomass and put it back into the ground through something called by which are you grow? Grass and instead of feeding at the cows. Can you put it through a process called pyrolysis? And what comes out it's a black glue that you can put in the ground. It's actually good like fertilizer but didn't keep the car in the garage or you can do on Fritz with built a place. I would like you can substitute word for concrete to we know everything we need to do. The problem is with doing it not at school yet. So it's all about taking the things

that already work and stealing them up and that's where I think digital technology can play a big role where online can play a big role on but we're still going to need regulatory changes. I mean, you know, what would be the best thing for the planet would be for every country in the world to put a price on carbon tax would be the most efficient simple way to do it. But you don't New York City in New York state in California have required businesses and landlords to get to zero carbon by 2030 or 2040 or 2015 if they don't they going to find I took

that is at another way of putting a price on carbon. Those are really good thing. They're good things because they will force people to change. I know it one of the largest landlords in New York City went to lunch the summer with and he said, you know this new law in New York City is completely screwing us and I said, so what do you do about it? He said we can't retrofit are buildings. There's no way we're going to meet the requirements in time. So what do you do about it? He says we bought a piece of property in Upstate New York, building a massive solar farm and we're going to bring

that energy down. I'm going to power up buildings with clean energy, but it sucks that you have to do that. Right? So I think that government has to do this government has to force the issue and once they do very very Can somebody throw them in diagram for that place? I'm speaking of the part of me. That's a human be there be there be dollars there to solve these problems for people that's a huge amount of innovation that will get unlocked or will get deployed much more broadly

the second we text carbon and the proper carbon tax would work in a way where you have to pay it if you admit and where you get to earn it when you remove And we got any more controversial thoughts. You want to share. All right. Well in that case, I think we'll just wrap up tax carbon government intervention. Maybe everyone can make money. Please join me if they got the wisdom isn't all bad.

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