October 11, 2023 • 31 mins
Renowned venture capitalist Vinod Khosla tells Azeem Azhar that humanity will have to rely on new and unproven technologies to reach net-zero emissions by 2050.
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Speaker 1 (00:03):
To tackle climate change, we'll have to put our faith
in technologies that don't yet exist. That's the premise for
today's conversation. I'm Asimazar. Welcome to the Exponentially podcast. Renewables
are booming. In fact, solar is the fastest growing energy
(00:23):
technology in history. Why isn't this record breaking growth enough
to bring us to net zero? It turns out that
some of the cornerstones of our modern life are big
ticket items when it comes to carbon pollution. More than
thirty percent of emissions come from making steel, chemicals, cement,
and food. So how do we keep what we need
(00:44):
and take out the carbon This challenge requires new solutions.
I've come to Silicon Valley to meet Vinode Koestler, a
venture capitalist who has made himself and his investors billions
of dollars. He's pouring that cash into the technologies that
sound like science fiction. Synthetic meat, fermented jet fuel, and
(01:06):
nuclear fusion, all of them huge bets to help solve
the biggest problem humanity has ever faced. Now, when I
first met you more than a quarter of a century ago, Venode,
you were really well known as a technology investor in
traditional it. You had built some microsystems, you had invested
(01:28):
in computer networking Juniper, which returned two and a half
thousand times its original investment to its investors, and one
of the first Internet search engines, Excite. But in recent
years you've got a reputation in a new area, which
is funding entrepreneurs who are built Now, when I first
(01:48):
met you, more than a quarter of a century ago, Venode,
you were really well known as a technology investor in
traditional it. You had built some microsystems, you had invested
in computer networking Juniper, which returned two and a half
thousand times its original investment to its investors, and one
(02:09):
of the first Internet search engines, Excite. But in recent
years you've got a reputation in a new area, which
is funding entrepreneurs who are building hard technologies to tackle
climate change. So it feels like there was a realization,
a realization that climate change was a real problem. Can
(02:30):
you talk me through how you came to that realization.
Speaker 2 (02:34):
Well, the first time I started thinking about climate was
in the late nineties seriously, and I realized we had
a large problem about ten percent of the world's spopulation,
seven hundred million people. So I had a rich lifestyle,
ritch in education, rig in Madison, rich in housing, REGI
in transportation, regiin energy, In every way seven billion people
(02:54):
wanted it, And then I did the math. Math didn't work.
Ten times more, ten times more cement, ten times more doctors,
ten times.
Speaker 1 (03:05):
Ten times more meat, ten times more meat.
Speaker 2 (03:08):
Right, All those were intractable problems with a linear approach
to life, and I decided to work on technology multipliers.
Can you substitute for more stale with technology? Yes? Could
you do housing differently with technology? Yes? Could you produce
(03:29):
more doctors with technology? And I don't mean human doctors,
AI doctors, yes? Could you build teachers with AI to
be personal coaches for every student on the planet affordably?
And all this has to be done accessibly and affordably.
Speaker 1 (03:44):
Well, it sounds like there are two dimensions there. One
part is this dimension of how do you deliver equal
prosperity to all of humanity, not just the richest ten percent?
And then the second question is how do you do
it within the envelope, that is, the capabilities and the
resources of the buiersphere, specifically our carbon budget. Coming to
(04:09):
that first question, I'm curious, as someone who is an
immigrant to the United states. You grew up in India,
do you think that, having come from one of the
poorer countries at the time in the world, that plays
a part in your calculus of the rest of humanity
the other ninety percent?
Speaker 2 (04:29):
Well, absolutely, First, I'd say hard problems are really fun
to work on, right because they're real challenged and everybody
assumes they can't be done. But on climate there were
technology approaches that made the world a better place and
that were much more tractable for my skill set of
(04:50):
technology based in ovation.
Speaker 1 (04:52):
One of the ways I think about technology is that
technology is things getting cheaper. When people think about that technic,
they think it's a widget like this tablet that I've
got here, or it's a computer, or it's a car.
But the heart of technology is that, unlike so many
of the other things we experience in the world, it
gets cheaper every single year, and that means it's democratic.
(05:17):
It's also inclusive. And the last time that I traveled
to India, the thing that you note is that everyone
there has a supercomputer because they all have smartphones. How
should we think about that in terms of climate technologies?
Speaker 2 (05:30):
I had this view that no large innovation ever comes
from an institution of any sort, the institutional system where
there's large companies, academics, other places. They're great at extrapolating
the past, not inventing the future they want, because inventing
(05:52):
the future you want involves much more innovation, which means
much more risk and much more probability of failure. So
very large innovations only come from the entrepreneurial world. Could
you imagine somebody at Hyatt or Hilton doing Airbnb. Could
you imagine somebody at Hurts or As doing Olber. Could
(06:14):
you imagine somebody at Walmart or Target to Amazon? Could
you imagine anybody at boeing a Lockheed or air Bus
to rockets like rocket Lab or SpaceX have done. Could
you imagine why didn't Fox, NBC or CBS do media?
It was Twitter and YouTube and Netflix and Facebook. People
(06:39):
they didn't know they were in the media business. So
large innovation only comes from these big players, and frankly,
the Internet itself. In nineteen ninety six when we started Juniper,
every major telco player told me they would never use
TSPIP in the public Internet.
Speaker 1 (07:01):
So TCPIP being the technical standard that makes the Internet
work and makes it different to the old phone lines
that it served us very well for one hundred years.
Speaker 2 (07:10):
So these Internet technology was taboo in the telecom world,
and no telecom player wanted it. They wanted an alternative.
The buzzword was ATM asynchronous transfer mode. Yes, that's right.
And when we started, Jennifer, every player told us never,
and Cisco, which was the prereer of Internet technology, said
(07:34):
they would never do a router up for the public Internet. Never.
That was a direct code from the cit of Cisco
to me. Yeah, back in that.
Speaker 1 (07:42):
It's kind of their business now though, isn't it.
Speaker 2 (07:43):
It is everybody's.
Speaker 1 (07:45):
Yes.
Speaker 2 (07:46):
My point is you have to take these large dress
and we did say we'll will build it and they
will come, and that's exactly what happened. In fact, this
particular episode was a very large return for Clima Perkins
for an hour. Is there twenty five hundred x about
seven billion in profit on three or four million dollar
investment not back makes up for a lifetime. Are the
(08:10):
losses and stupid things I've done in my life.
Speaker 1 (08:13):
There's a very interesting parallel between that story of early
internet technologies and I think what you have said about
technology and climate change. One of the things that you've
argued is that even though we've seen tremendous progress in
the spread of solar power and wind power and electric vehicles.
(08:34):
In the cold country of Norway, ninety five percent of
new cars are electric. In China's enormous car market, twenty
five percent of car sold today are electric. Despite all
that progress, that these proven technologies will not be sufficient
for us to reach net zero emissions by twenty fifty,
(08:54):
and that we need to take bets on big, unproven technologies.
Why do you think that's the case. Why can't we
get there with what we already have and what is
already proven to be growing exponentially.
Speaker 2 (09:07):
I use a term called the Chindia price, the price
at which India and China would adapt to technology, and
that's the price at which these technologies are cheaper than
their fossil alternatives. They may not be day one, but
they have to get there where they're cheaper than cold
based power plants, or natural gas based power plants, or
(09:30):
cold natural regular cemant or regular steel. So these alternatives
have to be cheaper than their fossil alternatives. In the
good news is there's only a dozen things that matter.
There's a dozen things that are very large emitters of carbon,
and if we fix those dozen, we solve the problem.
(09:53):
If we don't fix those dozen, we will have a
problem no matter what else we do.
Speaker 1 (10:00):
And those dozen are things like steel where we pretty.
Speaker 2 (10:03):
Steel, semans, aviation fuel, industrial heats, the industry, heat, HVAC,
air conditioning in people's homes, so it's all the bigger matters.
Agriculture is a big one, so animal protein and nitrogen fertilizer.
So there's a dozen of these that are very very
(10:24):
important to solve in the bulk of their missions. If
you solve this, I think the climate problem is done right,
which leads me to the most exciting part of this.
And my view is we only need a dozen people,
which I call instigators, to instigate the change in each
(10:44):
of these areas good example, there was no chance anybody
at General Motors of Volkswagen or your favorite company was
going to make electric cars happen. But Elon Musk didn't
know the electric car business, so he made it happen,
starting from first principles right and taking a lot of
(11:05):
humorist a lot of risk, a lot of criticism as well,
a lot of criticism. Near bankruptcy, it is hard.
Speaker 1 (11:13):
I guess your argument would be that because of the
ninety percent, the ninety percent poorest on the planet who
expect to have a better quality of life.
Speaker 2 (11:24):
We can't stop.
Speaker 1 (11:26):
The investment in people's own prosperity. And so the only
way you square that circle is through technology, which is
things getting cheaper, and that's why we need to pick
off these dozen problem areas in parallel. And the mechanism
that you have seen work both in renewables and decarbonization recently,
(11:50):
but also through the Internet, has been the instigator. Is
that a fair summary.
Speaker 2 (11:56):
That's a fair summary. So Elan Musk. Without to Landmarsk,
we wouldn't be on the path to electrification today. Whether
you like him or not, whether he succeeds or fails,
he has changed the worldview. The same has happened with
somebody like Pat Brown with meat.
Speaker 1 (12:15):
He does the impossible burger.
Speaker 2 (12:17):
When Pat started and we invested in impossible foods about
a little more than ten years ago, it was definitely
not an area people invested in, and people asked me,
what are you doing investing in hamburgers? But it was
this sustainability objective of reducing emissions from meat production. The
(12:39):
traditional way, and he actually uses traditional plant proteins plus heame,
which is a brood protein brood just like your beer,
which is the blood component of it that gives it
all the taste. Now, no food company would have done that.
Speaker 1 (12:56):
So we've got electric vehicles and we've got burgers that
can replace the traditional beef burger. What are three or
four other problem areas that you're finding?
Speaker 2 (13:07):
So long time ago, we invested in Lanzattag Jennifer Hommegren
is trying to change aviation fuel to a sustainable aviation fuel.
In fact, the goal is to produce it eventually from
municipal waste, So municipal waste to aviation fuel would solve
the carbon emissions from aviation. That's a really big example. Now,
(13:32):
we invested in Commonwealth Fusion Systems. When I met Bob Momguard,
he was just a senior fellow at the MIT Plasma
Fusion Lab and thinking about starting this company. And we
help them get going. And if we get fusion, if
you're right, we will have fusion for the planet and
reliable energy. Now, solar and wind are great, they've done
(13:54):
very well, but you don't want to watch your football
game only when the sun shining and or the way
is blowing. Right, al Gore is just wrong on the
cost of solar power. Solar power that's reliable and available
when you want to watch your football game, not when
the sun's shining is much more expensive today and not practical.
Speaker 1 (14:15):
Well, I was going to say that that. Of course,
you've also backed jag Deep Singh who makes batteries with
quantum Scape, So potentially you could put jag deeep's batteries
and other storage solutions with solar and wind and we
can then have that consistency like.
Speaker 2 (14:29):
Even we are taking alternative approaches to the same problems, right,
so we may have a battery solution, and we have
multiple battery solutions. And I'm very optimistic about deep geothermal,
which would make thermal power one hundred times more available
if you could drill deep enough. And my dream would
(14:50):
be to drill right under coal plants and tap four
hundred degree heat under the coal plant so we get
heat and replace the call without replacing the call plant.
So we have millimeter wave drilling just like your microwave
oven heating to do deep drilling as an effort. So
(15:11):
I'm saying just because we're doing fusion doesn't mean we
aren't doing geothermal also and batteries for storage, so solo
power becomes reliable.
Speaker 1 (15:21):
There is so much technology in here, this almost feels
like science fiction. It's pretty remarkable, and it does feel
that these are unproven. So if I was a policymaker
or just a concerned parents, I'd need summer suaging that
we could rely on these bets, how we know they
(15:43):
could even pay off.
Speaker 2 (15:44):
Uncertainty is a critical part of what we need to
deal with. I would say only the improbables are important
because it's the only way to do this technology multiplication
so all seven billion people can enjoy the lifestyle of
the riches seven hundred million. So we have to take risks. Now,
(16:05):
what is the solution if Commonwealth fusion doesn't work and
your thermal heat doesn't work. There's ten other fusion efforts
that others are doing, and I'm very very glad that
others are doing it. And not only did Bob Mumtngard,
who's a real instigator in fusion, He's instigated a dozen
other people to start other efforts.
Speaker 1 (16:25):
Right, competitors with different technical and scientific approaches.
Speaker 2 (16:29):
Not only that we just invested last week in a
new effort called Reality of Fusion right where Bob is
helping them build the magnets for his competitor in fusion.
Speaker 1 (16:44):
So let's talk about fusion power, which is really from
the realms of science fiction. You have backed a founder
called Bob Mungard who was an academic. He was up
at the Massachusetts Institute of Technology, and his business Commonwealth
Fusion Systems CFS. Fusion is a really difficult technical problem.
(17:05):
It involves getting a plasma of rare gases up to
temperatures many many thousands times hotter than the center of
the sun, containing that, controlling it, and then somehow extracting
useful electricity from it and doing that all safely in
(17:26):
an industrial sized unit somewhere. So how do you even
go about addressing that problem?
Speaker 2 (17:36):
Well, they think logically in small chunks. So we raised
the first one hundred million dollars for Commonwealth Fusion with
an odd argument that if we built a twenty tesla magnet,
which was the key risk in getting through real fusion,
if fusion didn't work, we could use the magnet for
(17:57):
nuclear medicine, for example in your local hospital. So there
were other uses for these strong magnets, MRI machines, power lines,
nuclear medicine.
Speaker 1 (18:06):
But let's be clear. You're talking about a twenty tesla
magnet here for fusion, whereas a high end MRI machine
might have a three tesla magnet. And this is orders
of magnitude right from three to four to five to twenty.
It's not just six times more, it's seventeen orders of
magnitude more powerful. So we are we're talking about a
(18:27):
really significant increment.
Speaker 2 (18:30):
The thing to understand about magnets, for example, and this
was the key realization, the size of a fusion reactor
will become scaled inversely with the fourth power of the
magnet strength. So if you go from five tesla magnet
(18:51):
to twenty tesla, your fusion reactor will be two hundred
and fifty times smaller. Think about it. That not only
makes it manageable, constructible, fast, changeable, fast, much lower cost modular.
Speaker 1 (19:08):
And so with the modularity you can string these things together.
You increase volumes. When you increase volumes, you improve learning rates,
so your unit costs comes down. It's what we did
with silicon chips.
Speaker 2 (19:19):
Yes, not only that high temperature semiconductors, but developing and
they enable these high magnets. So transition in one technology
in high temperature superconductors allowed for high Tesler magnets, which
allowed for fusion. But high temperature semiconductors are enabled and
(19:42):
in fact can be do cheap if you use the
solar technologies thin film solar technologies that are used to
make solar cells. So those same semiconductor processes could make
high temperature superconductor tape, which would make magnets stronger, inch
and much more scalable in high volume. So this is
(20:05):
an important point when you put all these together. The
idea of solar technology is being used to make superconductor
tape used to make magnets that are very very strong,
which make fusion reactors really much much smaller. Two hundred
and five fifty times smaller is a big deal. But
let me go even further. There's a beautiful plan Bob
(20:27):
and I have talked about. And everybody says, you can't
build five thousand power plants the regulation permitting all grid connections.
There's this much simpler entrepreneurial solution to this. We won't
build fusion plants. We'll take coal plants and replace the
cold boiler with the fusion boiler.
Speaker 1 (20:44):
And let the plant be provided you can get the
size down.
Speaker 2 (20:47):
Provided we can set get the size down, which we're
pretty sure will be the same size or smaller than
a boiler. If I might spend one more minute on
this analogy, because this is where experts are almost always wrong,
and that's why they've not participated in any large innovations.
Experts at big energy companies like the or Siemens, or
(21:08):
experts at Volkswagen. Yeah, they don't think nonlinearly. I say
all this to you and say, how are you going
to build that many fusion reactors? Let me give you
the following analogy. In the Second World War, there were
five liberty ships built in the United States in the
ten years before the Second World War started. Right the
next five years, we've built close to five thousand liberty ships.
(21:33):
If we can do that, Can we build five thousand
fusion reactors using high volume technologies like solar manufacturing, No question,
we can. I think the pundits are fundamentally wrong about
these things.
Speaker 1 (21:46):
Well, there's something that I really like about the way
that you tell this story, because the beauty about the
impossible is that sometimes we've done the impossible before if
you think about the magical things that we do with
semi conductors, extreme ultraviolet lasers, the vibration free factories that
(22:07):
are the size of aircraft hangers, but with cleaner air
than operating theaters. This would have all seemed like science
fiction in nineteen sixty or nineteen seventy, when silicon chips
were starting to become an industrial product. And of course
history only ever rhymes, it doesn't repeat. But we do
have some precedent of achieving these improbable outcomes.
Speaker 2 (22:31):
That's why I say improbable so important. In fact, the
only things that important, and we just got to take
enough shots saw that some of these improbables happen in
these dozen areas to solve climate change.
Speaker 1 (22:51):
The climate change problem is really significant. We can't get
there with our existing sets of technologies, and we need
to find some unproven technologies that will be supported by
these key instigators, these characters with certain qualities to make
the improbable happen. But there's still this question. I suppose
(23:13):
of scale and the billions of tons of steel and
cement and so on, and twenty fifty is only less
than three decades away, how do you actually get to
that scale? I could see that through these exponentials, these
technologies could get cheaper, very very quickly, and we could
(23:33):
start to build them in great quantities. But that in
of itself doesn't get you there by twenty fifty, right,
It might get you there by twenty seventy or twenty ninety.
Is it going to involve government incentives or interventions of
some sort or some other magical thinking.
Speaker 2 (23:49):
So those kinds of claims, yeah, are the purview of
experts in gurus right, and pundits who pontificate but don't
actually do things. Scaling is so much your problem. If
a reduced fusion to replacing five thousand coal boilers and
natural gas boilers in the United States, that's a very
solvable problem. I just gave you the map did with
(24:12):
liberty warships, that becomes a scalable problem. So do we
have to demonstrate a power plant by the early thirties, Yes?
Do we need to build ten or twenty in the thirties, yes.
That then sets us up starting in twenty forty to
really scale it in the next five years to every
plant in the US and in India and China meet
(24:33):
the Chindia price. Because these are semi conducted like technologies
from solar power generation. We've seen what that cost has done,
so that's scalable.
Speaker 1 (24:43):
I want to come back to governments though, because we
do have governments and they do play a role. The
Liberty Warship example you gave out was a course of
government initiative, and many of the core technologies of the
Internet started as government funded initiatives. And we've seen how
government interventions can transform industry. So, for example, the arrival
(25:07):
of the Environmental Protection Agency drove down vehicle tail pipe
emissions successfully over thirty or forty years. So in your
picture of improbable, difficult, yet to scale technologies that are
required over the next twenty or thirty years, what role
should governments play.
Speaker 2 (25:25):
Well, government has an important role to play. I'm talking
about a lot of technologies. We had the initial costs
of the first plank, the first five plants, the first
ten plants is above the cost of the fossile compotors.
So subsidies do play a role. Unfortunately, subsidies get locked
in instead of being declining with scale or time, and
(25:48):
they always should decline with scale and time. But it's
very important to get these nascent technology started because they
have a premium cost, which Bill Gates called the green premium. Yeah,
that has to be covered by somebody, and governments can
cover it till it gets to skip. No reason for
subsidies on solar or ing today.
Speaker 1 (26:09):
Absolutely they're cheap enough, so a government could step in
with some time limited declining subsidies in order to drive
those technologies down the cost curve so a market can form.
The thing about that policy that I find so interesting
is that it should appeal to those on the left
of the economic spectrum because it democratizes technology, making it
(26:30):
affordable for smaller firms and for households across every country
and in every country. And it should appeal to those
on the right of the economic spectrum because by having
that early intervention, you create a market which entrepreneurs can
then occupy and build businesses around. So it appears to
be a policy that should appeal to both the left
(26:53):
and the right. Why do we not see more of
that policy cropping up in the United States and across.
Speaker 2 (27:00):
The People on the right have generally not liked the
idea of any government intervention in anything. Aim to be honest,
this kind of approach will disrupt the traditional business in
each of these areas, and so there will be losers.
It's not a lot of fun if you're the disrupted party.
One has to remember, somebody gets disrupted. It's traditionally the
(27:25):
online players who are not innovating, and they're the traditional
constituency of the right and have the loudest voice. People
expect General Motives or General Electric or siemens to have
more clout and say in these arguments. We've seen that
with AT and T trying to control the Internet.
Speaker 1 (27:45):
Of course, we've talked about these magical, unproven technologies from
fusion to novel steels and cements and so on. What
do you think are the chances that we can get
to a global net zero by twenty to fifty the
back of these radical and unproven technologies.
Speaker 2 (28:03):
I would put it the following way. We will have
the ability to get to global net zero. Whether we
do it or not is a political question. Technology is
absolutely necessary, but not sufficient. There's other factors like politics.
It's not very fun being disrupted. This is why, from
my point of view, if he can build fusion boilers
(28:24):
and get the cold power plant industry in the natural
gas power plant industry behind us, the people who own
those plants so their value doesn't go to zero. There
are partners we're doing that in Cemac, a plant that
will come online the next few months in Reading, California,
just north of here, a cement plant where an auxiliary
product is the carbon captured as products. So the total
(28:47):
capacity of the existing cement plant will actually go up
and the old product will just be lower carbon because
the carbon's being put into new cab nets that make
more beautiful. Idea. If he can reaper person existing and planned,
it becomes easier to get the incumbents they disrupted along
and will accelerate the process.
Speaker 1 (29:07):
And easier then to build the coalition that we need
to political side of things to tackle this huge problem. Well, Vinode,
thank you so much for sharing this wisdom with me today.
I really have appreciated it.
Speaker 2 (29:19):
It's been fun. Thank you.
Speaker 1 (29:25):
Reflecting on my conversation with Vinode, I'm struck by three things. Firstly,
he puts an awful lot of importance on the idea
of the instigator, the individual who can have an outsize impact,
and I think there's a lot of truth to that.
Think about Steve Jobs or Elon Musk. The second thing
he does is he can visualize the potential of the
(29:46):
improbable or the highly unlikely. He can paint a picture
of the future when these technologies get real. But then
finally he brings it back down to something more prosaic.
We just need need to get going, and if we
get going, we might finally get there. Thanks for listening
(30:09):
to the exponentially podcast. If you enjoy the show, please
leave a review or rating. It really does help others
find us. The Exponentially podcast is presented by me Azeem Azar.
The sound designer is Will Horrocks. The research was led
by Chloe Ippah and music composed by Emily Green and
John Zarcone. The show is produced by Frederick Cassella, Maria
(30:30):
Garrilov and me Azeem Azar. Special thanks to Sage Bauman,
Jeff Grocott and Magnus Henrikson. The executive producers are Andrew Barden,
Adam Kamiski and Kyle Kramer. David Ravella is the managing editor.
Exponentially was created by Frederick Cassella and is an Eat
the Pie I plus one limited production in association with
Bloomberg LC
To tackle climate change, we'll have to put our faith
in technologies that don't yet exist. That's the premise for
today's conversation. I'm Asimazar. Welcome to the Exponentially podcast. Renewables
are booming. In fact, solar is the fastest growing energy
(00:23):
technology in history. Why isn't this record breaking growth enough
to bring us to net zero? It turns out that
some of the cornerstones of our modern life are big
ticket items when it comes to carbon pollution. More than
thirty percent of emissions come from making steel, chemicals, cement,
and food. So how do we keep what we need
(00:44):
and take out the carbon This challenge requires new solutions.
I've come to Silicon Valley to meet Vinode Koestler, a
venture capitalist who has made himself and his investors billions
of dollars. He's pouring that cash into the technologies that
sound like science fiction. Synthetic meat, fermented jet fuel, and
(01:06):
nuclear fusion, all of them huge bets to help solve
the biggest problem humanity has ever faced. Now, when I
first met you more than a quarter of a century ago, Venode,
you were really well known as a technology investor in
traditional it. You had built some microsystems, you had invested
(01:28):
in computer networking Juniper, which returned two and a half
thousand times its original investment to its investors, and one
of the first Internet search engines, Excite. But in recent
years you've got a reputation in a new area, which
is funding entrepreneurs who are built Now, when I first
(01:48):
met you, more than a quarter of a century ago, Venode,
you were really well known as a technology investor in
traditional it. You had built some microsystems, you had invested
in computer networking Juniper, which returned two and a half
thousand times its original investment to its investors, and one
(02:09):
of the first Internet search engines, Excite. But in recent
years you've got a reputation in a new area, which
is funding entrepreneurs who are building hard technologies to tackle
climate change. So it feels like there was a realization,
a realization that climate change was a real problem. Can
(02:30):
you talk me through how you came to that realization.
Speaker 2 (02:34):
Well, the first time I started thinking about climate was
in the late nineties seriously, and I realized we had
a large problem about ten percent of the world's spopulation,
seven hundred million people. So I had a rich lifestyle,
ritch in education, rig in Madison, rich in housing, REGI
in transportation, regiin energy, In every way seven billion people
(02:54):
wanted it, And then I did the math. Math didn't work.
Ten times more, ten times more cement, ten times more doctors,
ten times.
Speaker 1 (03:05):
Ten times more meat, ten times more meat.
Speaker 2 (03:08):
Right, All those were intractable problems with a linear approach
to life, and I decided to work on technology multipliers.
Can you substitute for more stale with technology? Yes? Could
you do housing differently with technology? Yes? Could you produce
(03:29):
more doctors with technology? And I don't mean human doctors,
AI doctors, yes? Could you build teachers with AI to
be personal coaches for every student on the planet affordably?
And all this has to be done accessibly and affordably.
Speaker 1 (03:44):
Well, it sounds like there are two dimensions there. One
part is this dimension of how do you deliver equal
prosperity to all of humanity, not just the richest ten percent?
And then the second question is how do you do
it within the envelope, that is, the capabilities and the
resources of the buiersphere, specifically our carbon budget. Coming to
(04:09):
that first question, I'm curious, as someone who is an
immigrant to the United states. You grew up in India,
do you think that, having come from one of the
poorer countries at the time in the world, that plays
a part in your calculus of the rest of humanity
the other ninety percent?
Speaker 2 (04:29):
Well, absolutely, First, I'd say hard problems are really fun
to work on, right because they're real challenged and everybody
assumes they can't be done. But on climate there were
technology approaches that made the world a better place and
that were much more tractable for my skill set of
(04:50):
technology based in ovation.
Speaker 1 (04:52):
One of the ways I think about technology is that
technology is things getting cheaper. When people think about that technic,
they think it's a widget like this tablet that I've
got here, or it's a computer, or it's a car.
But the heart of technology is that, unlike so many
of the other things we experience in the world, it
gets cheaper every single year, and that means it's democratic.
(05:17):
It's also inclusive. And the last time that I traveled
to India, the thing that you note is that everyone
there has a supercomputer because they all have smartphones. How
should we think about that in terms of climate technologies?
Speaker 2 (05:30):
I had this view that no large innovation ever comes
from an institution of any sort, the institutional system where
there's large companies, academics, other places. They're great at extrapolating
the past, not inventing the future they want, because inventing
(05:52):
the future you want involves much more innovation, which means
much more risk and much more probability of failure. So
very large innovations only come from the entrepreneurial world. Could
you imagine somebody at Hyatt or Hilton doing Airbnb. Could
you imagine somebody at Hurts or As doing Olber. Could
(06:14):
you imagine somebody at Walmart or Target to Amazon? Could
you imagine anybody at boeing a Lockheed or air Bus
to rockets like rocket Lab or SpaceX have done. Could
you imagine why didn't Fox, NBC or CBS do media?
It was Twitter and YouTube and Netflix and Facebook. People
(06:39):
they didn't know they were in the media business. So
large innovation only comes from these big players, and frankly,
the Internet itself. In nineteen ninety six when we started Juniper,
every major telco player told me they would never use
TSPIP in the public Internet.
Speaker 1 (07:01):
So TCPIP being the technical standard that makes the Internet
work and makes it different to the old phone lines
that it served us very well for one hundred years.
Speaker 2 (07:10):
So these Internet technology was taboo in the telecom world,
and no telecom player wanted it. They wanted an alternative.
The buzzword was ATM asynchronous transfer mode. Yes, that's right.
And when we started, Jennifer, every player told us never,
and Cisco, which was the prereer of Internet technology, said
(07:34):
they would never do a router up for the public Internet. Never.
That was a direct code from the cit of Cisco
to me. Yeah, back in that.
Speaker 1 (07:42):
It's kind of their business now though, isn't it.
Speaker 2 (07:43):
It is everybody's.
Speaker 1 (07:45):
Yes.
Speaker 2 (07:46):
My point is you have to take these large dress
and we did say we'll will build it and they
will come, and that's exactly what happened. In fact, this
particular episode was a very large return for Clima Perkins
for an hour. Is there twenty five hundred x about
seven billion in profit on three or four million dollar
investment not back makes up for a lifetime. Are the
(08:10):
losses and stupid things I've done in my life.
Speaker 1 (08:13):
There's a very interesting parallel between that story of early
internet technologies and I think what you have said about
technology and climate change. One of the things that you've
argued is that even though we've seen tremendous progress in
the spread of solar power and wind power and electric vehicles.
(08:34):
In the cold country of Norway, ninety five percent of
new cars are electric. In China's enormous car market, twenty
five percent of car sold today are electric. Despite all
that progress, that these proven technologies will not be sufficient
for us to reach net zero emissions by twenty fifty,
(08:54):
and that we need to take bets on big, unproven technologies.
Why do you think that's the case. Why can't we
get there with what we already have and what is
already proven to be growing exponentially.
Speaker 2 (09:07):
I use a term called the Chindia price, the price
at which India and China would adapt to technology, and
that's the price at which these technologies are cheaper than
their fossil alternatives. They may not be day one, but
they have to get there where they're cheaper than cold
based power plants, or natural gas based power plants, or
(09:30):
cold natural regular cemant or regular steel. So these alternatives
have to be cheaper than their fossil alternatives. In the
good news is there's only a dozen things that matter.
There's a dozen things that are very large emitters of carbon,
and if we fix those dozen, we solve the problem.
(09:53):
If we don't fix those dozen, we will have a
problem no matter what else we do.
Speaker 1 (10:00):
And those dozen are things like steel where we pretty.
Speaker 2 (10:03):
Steel, semans, aviation fuel, industrial heats, the industry, heat, HVAC,
air conditioning in people's homes, so it's all the bigger matters.
Agriculture is a big one, so animal protein and nitrogen fertilizer.
So there's a dozen of these that are very very
(10:24):
important to solve in the bulk of their missions. If
you solve this, I think the climate problem is done right,
which leads me to the most exciting part of this.
And my view is we only need a dozen people,
which I call instigators, to instigate the change in each
(10:44):
of these areas good example, there was no chance anybody
at General Motors of Volkswagen or your favorite company was
going to make electric cars happen. But Elon Musk didn't
know the electric car business, so he made it happen,
starting from first principles right and taking a lot of
(11:05):
humorist a lot of risk, a lot of criticism as well,
a lot of criticism. Near bankruptcy, it is hard.
Speaker 1 (11:13):
I guess your argument would be that because of the
ninety percent, the ninety percent poorest on the planet who
expect to have a better quality of life.
Speaker 2 (11:24):
We can't stop.
Speaker 1 (11:26):
The investment in people's own prosperity. And so the only
way you square that circle is through technology, which is
things getting cheaper, and that's why we need to pick
off these dozen problem areas in parallel. And the mechanism
that you have seen work both in renewables and decarbonization recently,
(11:50):
but also through the Internet, has been the instigator. Is
that a fair summary.
Speaker 2 (11:56):
That's a fair summary. So Elan Musk. Without to Landmarsk,
we wouldn't be on the path to electrification today. Whether
you like him or not, whether he succeeds or fails,
he has changed the worldview. The same has happened with
somebody like Pat Brown with meat.
Speaker 1 (12:15):
He does the impossible burger.
Speaker 2 (12:17):
When Pat started and we invested in impossible foods about
a little more than ten years ago, it was definitely
not an area people invested in, and people asked me,
what are you doing investing in hamburgers? But it was
this sustainability objective of reducing emissions from meat production. The
(12:39):
traditional way, and he actually uses traditional plant proteins plus heame,
which is a brood protein brood just like your beer,
which is the blood component of it that gives it
all the taste. Now, no food company would have done that.
Speaker 1 (12:56):
So we've got electric vehicles and we've got burgers that
can replace the traditional beef burger. What are three or
four other problem areas that you're finding?
Speaker 2 (13:07):
So long time ago, we invested in Lanzattag Jennifer Hommegren
is trying to change aviation fuel to a sustainable aviation fuel.
In fact, the goal is to produce it eventually from
municipal waste, So municipal waste to aviation fuel would solve
the carbon emissions from aviation. That's a really big example. Now,
(13:32):
we invested in Commonwealth Fusion Systems. When I met Bob Momguard,
he was just a senior fellow at the MIT Plasma
Fusion Lab and thinking about starting this company. And we
help them get going. And if we get fusion, if
you're right, we will have fusion for the planet and
reliable energy. Now, solar and wind are great, they've done
(13:54):
very well, but you don't want to watch your football
game only when the sun shining and or the way
is blowing. Right, al Gore is just wrong on the
cost of solar power. Solar power that's reliable and available
when you want to watch your football game, not when
the sun's shining is much more expensive today and not practical.
Speaker 1 (14:15):
Well, I was going to say that that. Of course,
you've also backed jag Deep Singh who makes batteries with
quantum Scape, So potentially you could put jag deeep's batteries
and other storage solutions with solar and wind and we
can then have that consistency like.
Speaker 2 (14:29):
Even we are taking alternative approaches to the same problems, right,
so we may have a battery solution, and we have
multiple battery solutions. And I'm very optimistic about deep geothermal,
which would make thermal power one hundred times more available
if you could drill deep enough. And my dream would
(14:50):
be to drill right under coal plants and tap four
hundred degree heat under the coal plant so we get
heat and replace the call without replacing the call plant.
So we have millimeter wave drilling just like your microwave
oven heating to do deep drilling as an effort. So
(15:11):
I'm saying just because we're doing fusion doesn't mean we
aren't doing geothermal also and batteries for storage, so solo
power becomes reliable.
Speaker 1 (15:21):
There is so much technology in here, this almost feels
like science fiction. It's pretty remarkable, and it does feel
that these are unproven. So if I was a policymaker
or just a concerned parents, I'd need summer suaging that
we could rely on these bets, how we know they
(15:43):
could even pay off.
Speaker 2 (15:44):
Uncertainty is a critical part of what we need to
deal with. I would say only the improbables are important
because it's the only way to do this technology multiplication
so all seven billion people can enjoy the lifestyle of
the riches seven hundred million. So we have to take risks. Now,
(16:05):
what is the solution if Commonwealth fusion doesn't work and
your thermal heat doesn't work. There's ten other fusion efforts
that others are doing, and I'm very very glad that
others are doing it. And not only did Bob Mumtngard,
who's a real instigator in fusion, He's instigated a dozen
other people to start other efforts.
Speaker 1 (16:25):
Right, competitors with different technical and scientific approaches.
Speaker 2 (16:29):
Not only that we just invested last week in a
new effort called Reality of Fusion right where Bob is
helping them build the magnets for his competitor in fusion.
Speaker 1 (16:44):
So let's talk about fusion power, which is really from
the realms of science fiction. You have backed a founder
called Bob Mungard who was an academic. He was up
at the Massachusetts Institute of Technology, and his business Commonwealth
Fusion Systems CFS. Fusion is a really difficult technical problem.
(17:05):
It involves getting a plasma of rare gases up to
temperatures many many thousands times hotter than the center of
the sun, containing that, controlling it, and then somehow extracting
useful electricity from it and doing that all safely in
(17:26):
an industrial sized unit somewhere. So how do you even
go about addressing that problem?
Speaker 2 (17:36):
Well, they think logically in small chunks. So we raised
the first one hundred million dollars for Commonwealth Fusion with
an odd argument that if we built a twenty tesla magnet,
which was the key risk in getting through real fusion,
if fusion didn't work, we could use the magnet for
(17:57):
nuclear medicine, for example in your local hospital. So there
were other uses for these strong magnets, MRI machines, power lines,
nuclear medicine.
Speaker 1 (18:06):
But let's be clear. You're talking about a twenty tesla
magnet here for fusion, whereas a high end MRI machine
might have a three tesla magnet. And this is orders
of magnitude right from three to four to five to twenty.
It's not just six times more, it's seventeen orders of
magnitude more powerful. So we are we're talking about a
(18:27):
really significant increment.
Speaker 2 (18:30):
The thing to understand about magnets, for example, and this
was the key realization, the size of a fusion reactor
will become scaled inversely with the fourth power of the
magnet strength. So if you go from five tesla magnet
(18:51):
to twenty tesla, your fusion reactor will be two hundred
and fifty times smaller. Think about it. That not only
makes it manageable, constructible, fast, changeable, fast, much lower cost modular.
Speaker 1 (19:08):
And so with the modularity you can string these things together.
You increase volumes. When you increase volumes, you improve learning rates,
so your unit costs comes down. It's what we did
with silicon chips.
Speaker 2 (19:19):
Yes, not only that high temperature semiconductors, but developing and
they enable these high magnets. So transition in one technology
in high temperature superconductors allowed for high Tesler magnets, which
allowed for fusion. But high temperature semiconductors are enabled and
(19:42):
in fact can be do cheap if you use the
solar technologies thin film solar technologies that are used to
make solar cells. So those same semiconductor processes could make
high temperature superconductor tape, which would make magnets stronger, inch
and much more scalable in high volume. So this is
(20:05):
an important point when you put all these together. The
idea of solar technology is being used to make superconductor
tape used to make magnets that are very very strong,
which make fusion reactors really much much smaller. Two hundred
and five fifty times smaller is a big deal. But
let me go even further. There's a beautiful plan Bob
(20:27):
and I have talked about. And everybody says, you can't
build five thousand power plants the regulation permitting all grid connections.
There's this much simpler entrepreneurial solution to this. We won't
build fusion plants. We'll take coal plants and replace the
cold boiler with the fusion boiler.
Speaker 1 (20:44):
And let the plant be provided you can get the
size down.
Speaker 2 (20:47):
Provided we can set get the size down, which we're
pretty sure will be the same size or smaller than
a boiler. If I might spend one more minute on
this analogy, because this is where experts are almost always wrong,
and that's why they've not participated in any large innovations.
Experts at big energy companies like the or Siemens, or
(21:08):
experts at Volkswagen. Yeah, they don't think nonlinearly. I say
all this to you and say, how are you going
to build that many fusion reactors? Let me give you
the following analogy. In the Second World War, there were
five liberty ships built in the United States in the
ten years before the Second World War started. Right the
next five years, we've built close to five thousand liberty ships.
(21:33):
If we can do that, Can we build five thousand
fusion reactors using high volume technologies like solar manufacturing, No question,
we can. I think the pundits are fundamentally wrong about
these things.
Speaker 1 (21:46):
Well, there's something that I really like about the way
that you tell this story, because the beauty about the
impossible is that sometimes we've done the impossible before if
you think about the magical things that we do with
semi conductors, extreme ultraviolet lasers, the vibration free factories that
(22:07):
are the size of aircraft hangers, but with cleaner air
than operating theaters. This would have all seemed like science
fiction in nineteen sixty or nineteen seventy, when silicon chips
were starting to become an industrial product. And of course
history only ever rhymes, it doesn't repeat. But we do
have some precedent of achieving these improbable outcomes.
Speaker 2 (22:31):
That's why I say improbable so important. In fact, the
only things that important, and we just got to take
enough shots saw that some of these improbables happen in
these dozen areas to solve climate change.
Speaker 1 (22:51):
The climate change problem is really significant. We can't get
there with our existing sets of technologies, and we need
to find some unproven technologies that will be supported by
these key instigators, these characters with certain qualities to make
the improbable happen. But there's still this question. I suppose
(23:13):
of scale and the billions of tons of steel and
cement and so on, and twenty fifty is only less
than three decades away, how do you actually get to
that scale? I could see that through these exponentials, these
technologies could get cheaper, very very quickly, and we could
(23:33):
start to build them in great quantities. But that in
of itself doesn't get you there by twenty fifty, right,
It might get you there by twenty seventy or twenty ninety.
Is it going to involve government incentives or interventions of
some sort or some other magical thinking.
Speaker 2 (23:49):
So those kinds of claims, yeah, are the purview of
experts in gurus right, and pundits who pontificate but don't
actually do things. Scaling is so much your problem. If
a reduced fusion to replacing five thousand coal boilers and
natural gas boilers in the United States, that's a very
solvable problem. I just gave you the map did with
(24:12):
liberty warships, that becomes a scalable problem. So do we
have to demonstrate a power plant by the early thirties, Yes?
Do we need to build ten or twenty in the thirties, yes.
That then sets us up starting in twenty forty to
really scale it in the next five years to every
plant in the US and in India and China meet
(24:33):
the Chindia price. Because these are semi conducted like technologies
from solar power generation. We've seen what that cost has done,
so that's scalable.
Speaker 1 (24:43):
I want to come back to governments though, because we
do have governments and they do play a role. The
Liberty Warship example you gave out was a course of
government initiative, and many of the core technologies of the
Internet started as government funded initiatives. And we've seen how
government interventions can transform industry. So, for example, the arrival
(25:07):
of the Environmental Protection Agency drove down vehicle tail pipe
emissions successfully over thirty or forty years. So in your
picture of improbable, difficult, yet to scale technologies that are
required over the next twenty or thirty years, what role
should governments play.
Speaker 2 (25:25):
Well, government has an important role to play. I'm talking
about a lot of technologies. We had the initial costs
of the first plank, the first five plants, the first
ten plants is above the cost of the fossile compotors.
So subsidies do play a role. Unfortunately, subsidies get locked
in instead of being declining with scale or time, and
(25:48):
they always should decline with scale and time. But it's
very important to get these nascent technology started because they
have a premium cost, which Bill Gates called the green premium. Yeah,
that has to be covered by somebody, and governments can
cover it till it gets to skip. No reason for
subsidies on solar or ing today.
Speaker 1 (26:09):
Absolutely they're cheap enough, so a government could step in
with some time limited declining subsidies in order to drive
those technologies down the cost curve so a market can form.
The thing about that policy that I find so interesting
is that it should appeal to those on the left
of the economic spectrum because it democratizes technology, making it
(26:30):
affordable for smaller firms and for households across every country
and in every country. And it should appeal to those
on the right of the economic spectrum because by having
that early intervention, you create a market which entrepreneurs can
then occupy and build businesses around. So it appears to
be a policy that should appeal to both the left
(26:53):
and the right. Why do we not see more of
that policy cropping up in the United States and across.
Speaker 2 (27:00):
The People on the right have generally not liked the
idea of any government intervention in anything. Aim to be honest,
this kind of approach will disrupt the traditional business in
each of these areas, and so there will be losers.
It's not a lot of fun if you're the disrupted party.
One has to remember, somebody gets disrupted. It's traditionally the
(27:25):
online players who are not innovating, and they're the traditional
constituency of the right and have the loudest voice. People
expect General Motives or General Electric or siemens to have
more clout and say in these arguments. We've seen that
with AT and T trying to control the Internet.
Speaker 1 (27:45):
Of course, we've talked about these magical, unproven technologies from
fusion to novel steels and cements and so on. What
do you think are the chances that we can get
to a global net zero by twenty to fifty the
back of these radical and unproven technologies.
Speaker 2 (28:03):
I would put it the following way. We will have
the ability to get to global net zero. Whether we
do it or not is a political question. Technology is
absolutely necessary, but not sufficient. There's other factors like politics.
It's not very fun being disrupted. This is why, from
my point of view, if he can build fusion boilers
(28:24):
and get the cold power plant industry in the natural
gas power plant industry behind us, the people who own
those plants so their value doesn't go to zero. There
are partners we're doing that in Cemac, a plant that
will come online the next few months in Reading, California,
just north of here, a cement plant where an auxiliary
product is the carbon captured as products. So the total
(28:47):
capacity of the existing cement plant will actually go up
and the old product will just be lower carbon because
the carbon's being put into new cab nets that make
more beautiful. Idea. If he can reaper person existing and planned,
it becomes easier to get the incumbents they disrupted along
and will accelerate the process.
Speaker 1 (29:07):
And easier then to build the coalition that we need
to political side of things to tackle this huge problem. Well, Vinode,
thank you so much for sharing this wisdom with me today.
I really have appreciated it.
Speaker 2 (29:19):
It's been fun. Thank you.
Speaker 1 (29:25):
Reflecting on my conversation with Vinode, I'm struck by three things. Firstly,
he puts an awful lot of importance on the idea
of the instigator, the individual who can have an outsize impact,
and I think there's a lot of truth to that.
Think about Steve Jobs or Elon Musk. The second thing
he does is he can visualize the potential of the
(29:46):
improbable or the highly unlikely. He can paint a picture
of the future when these technologies get real. But then
finally he brings it back down to something more prosaic.
We just need need to get going, and if we
get going, we might finally get there. Thanks for listening
(30:09):
to the exponentially podcast. If you enjoy the show, please
leave a review or rating. It really does help others
find us. The Exponentially podcast is presented by me Azeem Azar.
The sound designer is Will Horrocks. The research was led
by Chloe Ippah and music composed by Emily Green and
John Zarcone. The show is produced by Frederick Cassella, Maria
(30:30):
Garrilov and me Azeem Azar. Special thanks to Sage Bauman,
Jeff Grocott and Magnus Henrikson. The executive producers are Andrew Barden,
Adam Kamiski and Kyle Kramer. David Ravella is the managing editor.
Exponentially was created by Frederick Cassella and is an Eat
the Pie I plus one limited production in association with
Bloomberg LC
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