Ep18: Nancy Pfund 'Women backing Winners'

Transcript

Michael Liebreich

Cleaning Up is brought to you by the Liebreich Foundation, and the Gilardiini Foundation. Hello, everybody. And thank you for joining us. My name is Michael Liebreich, and this is Cleaning Up. My guest today is Nancy Pfund. She's one of the highest profile women, venture capitalists, and she's also one of the most successful. She runs DBL Partners. And she's going to tell us the story of how she came to be in that position via some of her early bets, being an early investor in Tesla, among them. I know Nancy because we sit together on the board of the Hawthorn Club, which is a club for senior women in the energy sector. And you'll be asking, why am I involved? I'm not a senior woman in the energy sector. And that hopefully will become clear.

So, let's bring Nancy into the conversation. Good evening, here in the UK. I'm in the UK. You're not?

Nancy Pfund

Hi, Michael. It's great to see you across the pond, as they say and wonderful to get together and talk about this. It is the day after the election here in the US. So, I didn't get as much sleep as I usually do. But ready to go here.

Well, thank you very much. And yes, it has been. It's been one of those days because I have been following the results of the elections. I also didn't get much sleep. And then in fact, today, some people will be asking, Well, why is he wearing a jacket? Not a tie, but a suit? Well, in fact, today, I got hitched to my partner, Alice, we entered a civil partnership today, so I'm joining you on just one of those days when you stay up all night watching an election and then get married. But there you go.

Yeah. Why not? Maybe you have a graduation later this evening. I'm not sure. But I'd love to share this milestone with you and congratulations to you and Alice.

And what could what better thing could I do then talk to you on this evening.

I'm sure you're your partner now, Alice is thrilled that

Alice is... She's very understanding. I hope. And we've certainly got some stuff planned. So. But thank you for joining me. I want to start if I might at the beginning, because I said in my

preamble that you're one of the most successful venture capitalists of your generation, and also one of the highest profile one of the very, very few women venture capitalists. So, could you go back to the beginning and talk us through that journey? How did you end up on that career path, which is quite spectacular.

Well, I wish I could tell you that I was you know ever from my young age, I just wanted to be venture capitalist, so I just worked really hard to get that job. But really nothing could be further from the truth. Because to be honest, I didn't know what a venture capitalist was until I was in my mid-20s. It wasn't something on my radar. When I graduated from college, I went to work for the Sierra Club in Washington DC. I was a tree hugger for way back. So, you know, I was part of a lobbying team as a junior member, so the path to venture capital was not linear. It really happened because I do, I've always had an interest in two things: entrepreneurship and innovation. And part of that is my father was an engineer, he was an inventor sort of grew up with all of these gizmos around the house. So just a soft spot in my heart for entrepreneurs and inventors. At the same time, I've always been interested in the interface between science and society and social issues, I've been active. You know, the Sierra Club is one example. Worked for Jerry Brown when he was governor the first time. So, I'm and odd hybrid of liking the technology and the entrepreneurship but also really interested in, in how do we, you know, improve policy for society at large. And so, all of that is to say that I worked in government, I worked at Stanford Medical School for a while, I worked for the Sierra Club. And then I went to work in Intel after business school. And that was, for me a real opportunity to see how in the early days of the semiconductor industry, you were shaping society, you were having this amazing impact and they were all in it. So, I actually was a speechwriter, one of my jobs for the one of the founders of Intel, Bob Noyce, because he was trying to communicate the power of electronics to a broader audience. And so, I was one of the few non engineers at Intel back then.

So, you had to really, you had to really think about the question because you are actually writing the lines Actually, yes. Why? Why do we do innovation and persuade people? It's good. Maybe we should just be good.

Exactly. And the good news is that Bob Noyce who passed away, at a way too young age, but he was a renaissance man, he was up for anything. If you felt you know, one time I had him singing a song in the middle of a speech, just to show the link between music and electronics and things like that. So anyway, I really caught the technology bug, but wanting to move to San Francisco. Speaking of getting married, I was going to be married and my husband was based in

the East Bay near San Francisco, and even back then, Intel is in Santa Clara County, it was a long commute. So, I said, Well, I'll go work in San Francisco. And now that sort of my life is changing. And back then, which I know it's hard for people to believe there were no tech companies in San Francisco. there just weren't

Mid 80s. I ended up at Business School in 88. When I was in Business School, San Francisco was kind of artsy, and it was a great place, very cool, but there was nothing in nothing in San Francisco. It was all, it was all in the Sand Hills Road. I mean, you had to go and drive to get to this.

Well, there was one thing that I found. And that was one of the early venture capital investment banks dedicated to then emerging tech sector called Hambrecht & Quist. It was headquartered in a building on One Bush Street in San Francisco. And the way I got there, so I said, okay, I gotta go work there, because that financing is the only thing they do in San Francisco. And so I better learn how to do that. And the way I did that, this was in 1984. is I... I just I'm telling the story, because it's the day after the election here. San Francisco was where the Democratic Convention was in 1984. So I said to my bosses at Intel, why don't we do a party in San Francisco for that convention? And we'll bring all the tech people, politicians, Senator Bill Bradley. And so we did that, that, and one of the people like I brought him on to be a sponsor of that party. And this was when Nancy Pelosi was the Chair of the Democratic Convention, then she wasn't yet a congresswoman. But one of the people I got on was Bill Hambrecht, the founder of Hambrecht & Quist, because he was an active Democrat. And so I got to meet him there. And I went to interview a few months later. And that's how I ended up at Hambrecht & Quist. And started this a securities analyst than switched to venture capital.

So I actually asked you because you'd gone from being a speechwriter, but you'd already become financial at that point.

Well, I you know, I had gone to business school, so I knew the tools. But no, I didn't. I also didn't know I had to show up at like five in the morning, because HQ was on market hours. And so I was completely, right.

They didn't tell you that at the interview, oh, by the way, this is gonna ruin your lie-ins that you want to have, you're not going to have them

And so some of my friends at the time saying well, you only switch to venture so you wouldn't have to get up so early to go to work because you only work market hours.

And this is a funny thing, because around this time, and I'd say 88 I went off to business school and I'm pretty sure I would have tried to interview with Hambrecht & Quist, I wonder whether you interviewed me and probably found that I was this you know, snotty British guy, absolutely of no value to the business, forget him. He's one of the one of the easy ones to put in a in a ding pile.

No, and there were a lot of back we had a Rhodes Scholar that was our CEO. Friend of mine, Dan Case. So there was I think London was one of our first offices. It's too bad we didn't connect back then, but I'm glad we are now

How funny cause Rhodes of course, that person would have gone to London to open that office then and I was coming the other way as a Harkness fellow. Which sort of disappeared thing but was quite prestigious at the time. Okay, so you ended up. You're so now you're in California and let's trundle through this. You ended up then doing real serious, you know, venture capital. When did you start to realise, when did you start to get your, when was your first sort of really big success? Where you thought I'm actually quite good at this.

Oh, well, I mean, it took a while. I worked with other colleagues at HQ. And we made some amazing investments. Odwalla, which sadly is no longer a thing, but was the first fresh juice company. We did that one very early on. I was, since I worked at the Medical School at Stanford, I did some life science, instrumentation investments like mass spectrometers and things like that, that eventually were used in, in environmental cleanup kinds of situations. So that was one of my first efforts to invest in environmental cleanup and sustainability.

So you kept the idea of this kind of the Sierra Club, sort of the tree hugger origins, you kept them alive, but you didn't over-trade them in the early years. But you did try.

Absolutely, because, yeah, I was it's always I would throttle it up and down. The good news is that this is a lot of people don't know this, that Bill Hambrecht was also a tree hugger. And he was on I think he was on the board of the Sierra Club. We actually raised a tiny environmental fund in 1990, way too early. That's when we did the Odwalla investment because it reduced the use of pesticides. And we did some instrumentation investments up, then went back then, of course, the internet exploded in the region. And so, we all became tech, internet investors. And so it wasn't until that post dotcom crash that we set our sights on climate investing.

So this is really interesting, because I had a couple of weeks ago, Ramez Naam and I also had last, I think it's just come out last week. It just had its premiere. Auke Hoekstra, who is a Dutch guy, but he was working on internet stuff. And of course, Ramez comes from that sort of, you know, the silicon tech background, as do I. And we were talking about why is it that we found it sort of easier to see the magnitude of some of these trends? Why is it that the whole energy sector was sort of saying, Oh, you know, it must be oil and gas forever, and coal can never be dethroned. And then we came along and sort of said, No. I mean, there's so you were having what you if you hadn't come from being pure tech to clean technologies, you had been the environmentalist, but the parts then converged?

Well, it had been percolating for many, many years. And that first fund we did, while we made some good investments, it was super difficult, and there was no enforcement of laws. And so we learned a lot from that episode to apply to our first impact fund in 2004, where we did the PowerLight, SolarCity and Tesla.

Was that still with Hambrecht & Quist? Or have you now moved on? Because you were then with JP Morgan, right?

Well, what happened is Hambrecht & Quist went public in 98, was acquired by Chase in 2000. And then Chase acquired JP Morgan.

That's how you ended up. Okay. And so then now those early, so you then ended up and you just listed some investments where they went past very fast. You did SolarCity, you did, this was early, this was...

Before we did the first environmental investment we did in our first impact fund was PowerLight, which was sold to SunPower about, you know, it's the it's the distribution, the big distribution piece of SunPower now, so that was it.

So just for those, there'll be some people on the, you know, in the audience, hopefully, who are coming into this and don't know, all of the names and the you know, just how central you've been to some of these developments. When you say the distribution piece of SunPower what was PowerLight's business model, just very briefly, it was putting solar onto roofs.

Yeah, like the Moscone Center in San Francisco, which was one of the first big buildings to have solar power, like, did that.

Okay, what was some of the other ones?

For commercial and there weren't residential in the early days, but

Bigger roofs, you needed bigger roofs.

Yeah, yeah. And so, Tom Dinwoodie and Dan Shugar were the president and CEO there and we invested with them, and they were going to go public, they had hired Morgan Stanley, but we got that offer from SunPower that was too good to pass up. So that's how that happened. I mean,

What are some of the other names that you did around then?

Yeah, so that, we did Tesla in 2006. Well, in 2007, I believe. And then we have, funny story. We worked again with Dan Shugar, who worked with the PowerLight when he started NEXTracker, we were early investors there. So and then that Bellwether Coffee, which is the

NEXTracker, Dan Shugar, NEXTracker. And that's the that's the one that does the tracking technology, does it not?

Yeah.

That's still I mean, that's a big name today. Right.

Yeah, it's a behemoth. I mean, I think they have the leading market share. They're now part of Flextronics. They were sold to them several years ago, but Dan Shugar is still there and

I visited with him. Just a couple of years ago, I was out actually talking to a company I don't think you're in which is Chargepoint, which is something that I have, as an angel I went into and I visited them in California, they did this little tour and I ended up with Flextronics and, and talking to the NEXTracker team. So but okay, before we get on to Tesla, which we're going to have to talk about, because it's a big deal. Just one question, going back to this thing about, you know, you have all these technologists coming out of the sort of dotcom period, and sort of some of them looking around and looking for the next big, but when did you realise When did you? Or was there ever a point where you said, okay, the internet is transformational, but here's where it'll actually get applied, you know, it will actually solve some of those problems around the environmental technologies that couldn't have been solved in a 1990 environment. Did you ever have that thought explicitly?

Well, clearly, the internet changes all sectors. And we, since we've been at HQ, we banked a lot of those early entrants like Netscape and such, we saw that early. I will say, though, that the clean energy opportunity really came from, started from a different place, that started from the fact that we became the first impact venture capital firm of scale, by virtue of raising an impact fund, with foundations and banks. And we were, we were really interested in job creation for lower income people and for people that didn't have college degrees necessarily. And so that opened our eyes to, and we had to prove that to some of our investors that we could create these jobs. So that opened our eyes early to companies like Powerlight, that were hiring tonnes of people, SolarCity, you know that. Now, the rooftop installation job is the third fastest growing category, according to the Bureau of Labor Statistics, back then it was unheard of, but we thought, hey, if this, this catches on, we're going to create a lot of amazingly good jobs. So

that was how we, we got into clean energy, in addition to our just belief, you know, Al Gore had done 'An Inconvenient Truth', we felt, hey, things are different this time than they were in 1990s.

This was 2005/2006 presumably?

Yeah. So we just felt, hey, the world is actually waking up to this. And it's not just the advocacy groups, it's becoming more and more mainstream, even though it took a long time that we said something was up.

Yeah. And that the jobs thing that's so interesting, because so you really did come into this from a different route to Ramez Naam, and Auke and myself, and so on. But the jobs thing really resonates now, of course, because we're all we may be about to be doing a Green New Deal.

But in Europe, they are doing a Green Deal. And of course, the COVID recovery, I've argued needs to be built around an energy efficiency drive for exactly that reason. These distributed technologies are the ones that are going to create all the jobs, it's going to be the batteries, it's going to be the insulation, and moving to heat pumps, those sorts of things going to employ millions of people around the world.

Yeah. And already do I mean, it's, there are like over 3 million Americans that are employed in clean energy right now and growing more than fossil fuels. So this is a good thing. It's partly how the industry has accumulated the political capital that it has that is allowed it to level the playing field with the incumbents.

Yeah, demonstrably creating those jobs. Okay, so you've got this fun and now 2007 You said that you invested in Tesla, you're in the first institutional round.

It was actually 2006

Sorry, 2006. So it really was Wow, you You're so I'm really interested in these moments when light bulbs go on. And yeah, was it just who did you first meet, was this...

We first met JB Straubel, a meeting at Stanford that we have been introduced to him. And, again, our mission helps to open our eyes to an opportunity that a more traditional lens would have missed, frankly, because when we heard JB obviously being climate oriented, we were like, well, electric cars are something that we should, we should have in the society. There have been the decade earlier the GM disaster with electric vehicles and who killed the electric car and all that. We said, you know, what we think it actually might work this time, because people are more oriented towards the climate implications. And plus, this is going to be a really fast, great car, that people you know, there won't be any sacrifice in driving this thing. So that was super exciting to us. We also, because of this jobs focus, we said, huh, and if the car company does even half of what it's expected to do, it will hire a lot of people because you need a lot of people to, to build cars. And so again, that focus on creating high quality companies that create high quality jobs within your own society, as opposed to offshore was something that we were very hopeful about. We didn't know. And so that weighed into our decision to invest in Tesla, even though everyone at the time thought it was a stupid idea.

Well, that's right. And I was one of those, I'm gonna be honest, I've had this conversation with Ira Ehrenpreis, who will no doubt show up in this conversation at some point. Because, you know, it's hard now, perhaps to remember just how stupid of an idea it was to start a new car company. I mean, it was a laugh line in my summit presentations at the Bloomberg New Energy Finance Summit, because I talked through... In fact, I used this explanation why we shouldn't care that Solyndra went bankrupt. And I said, Look, there were 500 car companies at one point, and now there are three. And then I said, or maybe four because there's this company called Tesla that thinks it's gonna join the big time. That's so ridiculous. And everybody laughed. I mean, we're talking probably at that time, it would have been 2009/2010 you know, but obviously, we all know where we are now, which is that Tesla's market cap is bigger than all of those companies, those surviving car companies combined. So it really was a wild bet, was it not? Or did you always think because of you, because you had been conditioned differently?

Did you always think that this is a no brainer? That's gonna work?

Well, yeah, we had no idea, obviously, what would become that. Because it's just a Colossus. I mean, it's one of the world's most significant companies, and you don't go into any investment thinking that will necessarily happen. I mean, obviously, you hope it does. But what we didn't know was that it would redefine the opportunity, because it was not asking people to sacrifice a fast, beautiful car in order to do the right thing for the climate. It allowed you to do both. And we felt that gave it an advantage. We had no idea of all of the technical hurdles, we would have to overcome the regulatory advantages of the incumbents, be that the car companies or the car

dealership laws mean, there was just a litany of obstacles in our path. But so we didn't really think about the future, we thought more about survival, and just, you know, knocking down one obstacle after another. Fortunately, in California, we had the California Air Resources Board, which was on the same page, more or less, not that there weren't conflicts, but they back then they were saying to Honda and others, if you don't sell emission free vehicles, you need to buy credits to make up for that.

And so was that already under Mary Nichols? And yeah, that was another great woman leader in the space and so she was also one of the allies in and when you say we for Tesla, you were on the board so that must have felt very, we-like you must have been there in the trenches alongside JB Straubel and Elon and the team

Yeah, I was a board observer but very active and but one of the things we did was work with the company to figure out where is the place to build that Model S, it was called White Star back then. And we because of our jobs focus, we worked to see can we actually build this locally as opposed to overseas or some other place. And so we worked with team members at Tesla to come up with sites. And we went through many sites before we got to the old NUMMI plant, which was, of course, the biggest prize of all. But this notion of manufacturing locally, was another controversial facet of Tesla's evolution. And we were super supportive for it, both in terms of the business rationale, which is to keep manufacturing and R&D and headquarters within a reasonable commuting distance, because it's so iterative in those early days, from our mission point of view, we wanted to prove that you could still build cost effective car factories in the western US.

And the first Gigafactory, the decision to vertically integrate all the way back into batteries. Was that taken while you were on the board?

That happened later, after the company had gone public, we worked on the Fremont Plan, the process leading up to the car plant in Fremont, California. And then when the company went public, I mean, we certainly helped a little bit, but we were now working on our other companies in our portfolio we were you know in a position to exit that investment.

And I want to ask about that. I'm sure it's in the public disclosures. When did you exit? How long did it, because of course, you know, Tesla had this phenomenal, ferocious run up since the

IPO. So did you get to the IPO and say, well, thank goodness, we dodged a bullet, let's get out of this as quickly as possible, we've done well, or did you say no, no, we're gonna stay in and ride this up for a while.

We exited at various times. And of course, we couldn't exit at the IPO for securities laws, reasons. So it was sort of a continual distribution. We didn't sell the stock, we distributed it to our investors. And some of them own it to this day.

Well, the reason I asked coming back to Ira, Ira Ehrenpreise because I had this conversation with him before the IPO, saying you're mad, a car company, you're a venture capitalist Ira, what are you thinking? And I know it's gonna be fantastic, and it's going to be great. And I said, Well, I beg to differ. I think this is going to end in tears. And of course, it was this magnificent IPO, very successful. And I met Ira shortly after that. And I said, I hope that as soon as that lockup that you mentioned in securities laws, as soon as that expires, I hope you're getting out because, you know, this thing cannot possibly continue to defy gravity. No, he said, you don't understand anything. I was like, Okay, I beg to differ. He was right. I was wrong magnificently. Because I know that he did ride it for quite some time. Maybe not, I mean, maybe like yourself, he was building down his holdings. But he did. He was very committed after the IPO as well.

Well, Ira's my partner and of course, we will we then

I want to get on to that.

Yeah, we have a lot of stories to tell from those early days. And of course, <unclear> on the Tesla board. So but you know, as a fund manager, you have to, your LPs have a certain timeframe. And so you're always juggling what you think the value is versus what their needs are. And so you know, it's a process,

And it's a quality problem to have, you know, I've made so much money on this one, do I stay in and make more or do I? And so…

Yeah, well, I want to say, Michael, you're not alone in that scepticism. So it happened so long ago, and there were so many people that just read the riot act on this. And I think

There's one lesson if we're going to generalise some lessons here, which is that, you know, you were very conditioned by your background environmentalism, and then this attempt to create jobs and so you were using a different lens when you were looking at investments. Then there's a bunch of us that came out of more I would say sort of IT type technology that we use lenses and notice things like the experience curve in solar very early. But I've got a mechanical engineering, but I've worked in car factories to put myself through college and that was... conditioned me to, you know, to be very sceptical about it. I would have walked away from that deal. And look how wrong you know, that would have been. So our experiences, condition, the opportunities that we jump on that we like and that we that we understand.

It's so true and also your connection to your community. What a lot of people that don't live around here don't realise is that NUMMI plant was a huge economic engine of the region for many, many years. Starting with GM, and when it shuttered, there were 5000 jobs that were lost. And that that Fremont area went from being a star player in the Bay Area's economic development to being left out. And so it really was a huge dislocation in our region when that plant shuttered. And so the ability to bring it back, have it address 21st century needs, which for low carbon as opposed to gasoline powered cars, was you know, the chance of a lifetime. And now we're all benefiting from that transition.

That's such an important story. For this week, if it wasn't election week in the US, there's something else going on in our space, which is the German Industry Association, the VDI, the Verein Deutscher Ingenieure, the German industry trade association, has, again, produced a piece of research showing that diesel is better in terms of emissions than electric vehicles, it's complete and utter rubbish. Auke I've mentioned is the great, I call him the Debunker-In-Chief, he's had to waste more days explaining to this and what you've got is these, these, you know, organisations and people and companies that are terrified of those job losses. But instead of saying we're going to lean in, we're going to create new jobs, new value for the 21st century, they're actually just producing this nonsensical analysis that try to mislead people into not doing the obviously right thing.

It happens all the time in our practice with the solar and just the rooftop solar guys. Oh, the cost of net metering, it's a cost shift instead of a revenue loss. I mean, they can convince I mean, it's understandable, they want to hang on to the great trajectory that they’ve built over, you know, in some case, a century. And so, they don't want these new entrants to come in. And they have, you know, there's regulatory capture, there's, you know, they can hire the experts, they do have an advantage. And that's why in our practice, impact investing, it's super important to pay attention to policy, and to jump in, you're not going to win every policy battle, but you can't do this, you can't upend whether it's the transportation industry from the early 20th century, or now as we're decarbonizing agriculture company, we have Farmers Business Network, you know, they're taking on companies like John Deere, the whole model from the 1800s. And so there's just an accumulated advantage these companies have in policy, in getting access to experts and trying to own the narrative. And so that's what, you know, people like you and people like me, we spend a lot of our time undoing that.

Well, that was the opportunity that, you know, New Energy Finance, we ended up sort of sitting between the policy people, the finance people, the energy companies, the tech companies, and trying to translate in those sort of four languages. But it would be wrong, to have this conversation and not to talk about that weird period of 2000 and 2006/2007/2008, when suddenly, everybody piles in and they start trying to do clean tech. And they don't, in my view, they don't understand this piece about the policy. They don't understand how capital intensive it is. They don't understand how policy intensive the whole bunch of mistakes. Were you looking at that at the time and saying this is going to end in tears. These 1400 new venture capital companies with clean tech and climate funds. This is just going to be like dotcom boom bust. Did you know that at the time?

Well, we call that period, the period where the tourists came in, you know. Tourists because you know many of them came from great tech background tech was in the doldrums, let's do this. But then when it when it got difficult and tech rebounded, many of them left so that's why we call them tourists.

Have you met John Doerr and told him that you call him a tourist?

Well, I've known John Doerr since way, way before. And certainly, you know, Kleiner Perkins has continued to Yeah, in some of its offshoots at to invest in the sector. So, you know, and one

of my CEOs, the company I just mentioned FBN, the CEO there, the co-founder is a former Kleiner partner. So, I think that Kleiner, you know, has, well, everyone had their difficulties, they there, they have been there for the long haul. And the other efforts they've spawned, like, other GTV blanking on the name, but anyway, they, I think they deserve a place in the ecosystem for many reasons. But those other, a lot of firms came and went. And yeah, they didn't realise that the capital intensity in parts of the business, the role of policy, and not just like I was a life science investor for a while, and they're, you know, you know, that the FDA can make or break the company. It's not like this is unique to clean energy.

That's the Food and Drugs Administration, sorry to interrupt I just made a little because not everybody is going to be US based.

Whatever country you're in, there's a regulatory body that calls the shots in terms of whether a drug is approved or not. So this notion that clean tech is unique in that it's nonsense. But what is different, at least in the States, is that the regulations in our sector, every single state, it's like, you could have 50 different versions of solar regulation or car dealerships. And so it, you know, there isn't this national energy policy that unifies it all. And so you just you hire people in Washington, DC, and you're done with it. In this industry, so much is done at the regional level and the state level that you have a whole different army of efforts.

That's right, because you've got a lot of policy in the 50 states. And, of course, sitting here in London, in Europe, there's this kind of myth that oh, well, you know, you have the EU and then you just have to send people to Brussels, and it's all sorted. And not only do you have different region, different states, you've got different countries, you've got different languages. So the myth of these huge markets being so attractive to startups is actually it's I mean, it is a myth, you've really got to succeed battle by battle and location by location, don't you?

It's so true. I mean, it's been gratifying to see some of some of the really good laws in California and a few other states take hold and be replicated. And you know, who knows, if we have a change in administration, we may see some of these more supportive regulatory approaches occur at a national level. But I'm not… I don't think well, we'll have a national energy policy any time soon.

And thank you very much for that reminder, if we have a new administration, because as we are recording this, the vote counting continues in, no I think Wisconsin is done but in Michigan, in one of the Carolinas, South Carolina, in Georgia, and in Nevada, and so on. So we're both I'm a little bit on tenterhooks. I know as soon as we finish recording, I'll be on the phone on the, you know, trying to figure out what's happened.

Absolutely. We're taking time away from checking our Twitter feed here. But it's worth it.

Well, and thank you. I'm delighted you said that. And obviously, we are at a watershed and I don't think we I don't think we should spend much time hypothesising about one or the other president. But it is a watershed moment. How much does this decision of the new administration, a new president, how much does it matter, given that so much happens at the state level?

Well, of course, I'm always, in my profession, you have to be an optimist because you encounter so many obstacles. You need that that attitude. So I'm always the one that says, oh, it's okay that we don't have stuff at the national level, because we have these strong regions, and especially California, which is the largest state. We have, like half of a market without it. And, and it's true. I mean, we have been able to make a huge amount of progress. But what I really think is wouldn't it be great to have both leading regional efforts and a federal government that takes the best of these, these laws and turns them into national policies like it be that cap and trade be that the low carbon fuel standard, there are all kinds of proven policies that are not pilots. I mean, California is what the fifth or sixth largest economy in the world. And we can learn a lot of lessons here. We're gonna learn them from Massachusetts, from New York, from Washington, there's just there are some precedents that we should be surfacing at the federal level. And so that would be a difference. I think that would happen were Biden to become president.

Yeah. And there's also the international context here. The UK is going to be the host to Cop26. The next climate negotiations exactly this time next year in Glasgow. And, you know, in one version of the future, you've got the UK, the EU, Japan, South Korea, and now China all committed to net zero by 2050. in China's case, 2060. If the US were and Canada, and if the US were to join that group, you would have then three quarters of the global economy committed

to a mid-century net zero target. Yeah, another version of the future, you don't have that. So it is pretty it's a fork in the road, isn't it?

Yeah, this is this is a huge opportunity for our generation and for future generations. Yeah, to get that scale that unanimous approach. So I hope that, I hope that will happen. And just as an example of something in our portfolio, now, in the very early days, like PowerLight back in 2006, that I mentioned, we sold to SunPower, the California Energy Commission was giving out grants and loans to solar companies just to help them get started. And, you know, that helped build what is now a huge global industry. And what I see now the CDC doing, which gives me great hope, is they're putting out requests for proposals for all electric buildings. And meanwhile, there are many cities, especially on the west coast, that are banning natural gas in new buildings. And so I feel that these early signals of a move to electric and to, you know, a green grid that we're seeing are going to bear fruit and that you know, 10 years from now, this will be a hot sector and there will be companies up and down that building sector and appliances sector that will benefit and one of our companies up today Bellwether Coffee is using electric roasting to replace natural gas based roasting of coffee. I mean, it's a genius idea. It's cleaner, it's cheaper, the coffee, because it's like a SolarCity for coffee roasters, you put the coffeeshop, you get this wonderful, freshly roasted coffee that tastes a lot better. That’s the whole no sacrifice approach? You're doing the right thing for the climate, right? Getting a better cup of coffee. And in the US alone, there's 400 million cups of coffee consumed every single day.

So Bellwether Coffee is now one of my most favourite companies. I'm going to talk about it all the time. And the reason is this. I was going to ask you about hydrogen, you said everything, you know, get these electric buildings, there is a huge sort of full court press going on from a lot of industrial players. There's also a whole load of what you call these venture capital tourists who have decided that it's time finally for hydrogen to be the thing. And I don't know if you noticed, I've just written a piece. I've written two pieces on hydrogen, one on the supply side, one on the demand side. And one of the big things that was an eye opener, as I wrote that, that demand side piece is all industrial heating, pretty much, can go to electric. It doesn't have to go to hydrogen. There's just in fact, as you think about it, there is no good reason for a lot of it to go to hydrogen. In fact, you know, maybe there may be exceptional situations where you do.

And of course, coffee roasting is one of the examples that you could do absolutely electrically and there's probably somebody out there who hates this broadcast, this podcast, because they have got a hydrogen based coffee roaster that they're determined is the answer to everybody's problems.

Yes, absolutely. Hydrogen for us is not the path of efficiency. And Bellwether Coffee is an example of that. Why? Why put hydrogen in that equation when the <inaudible>, distributed, electric roaster is cheaper, better faster, and I think we'll see that across the board. And even unlike the solar industry, where the utilities were threatened by rooftop solar, even the utilities like it, because, they don't have to, they're not going to get stranded gas infrastructure assets, by these laws and these regulations that push for all electric buildings there, it's right in their sweet spot.

Electric utilities - yes. One of the, you know, one of the big, the big voices pushing towards hydrogen is, of course, the people who own the natural gas distribution networks, because they are, you know, they are, I don't wanna say panicking or freaking out, but they are, they're freaking out that if you're, if you're pushing all these buildings to have all these fabulous technologies, and all of industrial heating goes electric, then your gas, you know, you're still gonna need gas for I don't know, for backup power generation, and potentially, as I've written about, maybe hydrogen for backup power generation, but you'll do it in a large central hub, in an industrial port city, you won't do it, you won't need those retail distribution gas networks anymore.

Exactly. And you'll reduce the transportation that hub and <inaudible> generates a lot of carbon in the driving to and from the plant. We've done a calculator for how much you save, and it's a 90% reduction in in the coffee roasting products process, 90% reduction in carbon, and even... You're right about the gas utilities, but even PG&E, that is both gas, and electric, is supporting this move to all electric buildings, because they just don't want to be saddled with stranded assets someday, that is new gas infrastructure today, that then becomes regulated out of existence later.

Well, that's right. I mean, at some point they... So at some point, players like that are going to have to walk away from some assets. So you know, the right calculation is to do it earlier. And not, as we're seeing with these, you know, the German Industry Association, there's kind of postcard from the future of having to say more and more extremely stupid things to justify, you know not walking away from your stranded assets.

Exactly. And so I love it when innovation and policy and investment all come together. And we can avoid some of those, those unproductive paths.

I'm just conscious of time, it's moving on. And we got two more topics that I think I'd love for you to... I'd love to talk with you about. One is the stuff that you're doing in the developing world. And the other is the stuff that we do together. But you're much more actively involved than I am on the Hawthorn club for energy, women, energy executives. So let's make sure we cover those two off. You've got off, off grid electric was one of your investments, and it's now called Zola talked me through the genesis of that, and what is it? But again, you know, did you come to it because you wanted to do something it was the right thing to do to be involved in the developing world? Or? Or was it the opportunity that kind of led you to that?

Good question. Zola was an investment that I first we first got to know, because Solar City invested in it. And part of that is the founders of Solar City, the Rive brothers were from South Africa. And they saw this company that was selling small solar systems to places in Africa that didn't have electricity is just very compelling. And they wanted to be helpful. And so that was how I first got to know about it. And they were on the board. And then we invested in a subsequent round. Because we felt that anyone that spent five minutes in Lagos, for example, knows we know we have a problem if we don't improve the infrastructure in Africa, where all the population growth is happening, where there isn't sufficient electricity infrastructure to meet the needs of today, let alone 20 years from now when Nigeria will be larger population than the United States. So we have to do something. So what happened with Zola is they started as many do in that going to rural areas, small systems that allow a house to have lighting, have phone chargers set up a little business, outside their home. And that's a wonderful thing. And they have huge, you know, over a gigawatt of that. But what we invested in very soon after the series that we were leading is to, to address the urban market and to go after the use of diesel generators, which is an endemic to the developing world, I think there are 20 to 30 million diesel generators out there. And they're horrible, not just for the environment in terms of the carbon that's created. But for health, I mean, the particulates, the noise. These are in people's apartments or they're in places they just shouldn't be because the grid that goes out every day. And so they want to keep their air conditioning their fridge, and so they buy a generator. And so we, the company, Zola spend a few years developing a product and with end phase was, we have a relationship with that, to allow your electricity to stay on just to go seamlessly from your solar to the grid. And then when the grid goes down to your storage battery without having to redo anything, you don't even notice it's happening. And it's not, you know, it's cost competitive, and thereby eliminating really bad actor in the developing world, which is that diesel genset, and so that's where the company is, its future, will be more in that.

And that allows you to tap into a pan-African solution, as opposed to just the rural areas, and use business development tools, work with other large companies in Africa that want to sell a

lot of electricity to urban populations. So that's, that's been an exciting, you know, it's always really difficult to do things in the developing world. But we're very, very excited about this new product that Zola has developed.

Very good. And how many countries is it currently operating in?

It's in, it's an East Africa, so Tanzania. It's in Lagos. It's in Cote d'Ivoire, it's about four or five. But with this new product we're working with like, we haven't announced it yet. But one of the major African sort of electronics companies that would be in South Africa and Mozambique, and other places. So we'll quickly see across the board solution that it's applicable throughout the continent.

That's great. And I have a tiny I'm not on your scale of investing, I have a tiny angel investment in something called Azuri that operates in Kenya, and Tanzania, and a few others and, but I'm also an advisor to a company called Ignite Solar, which is designing medical devices that are I call it designed for solar, because I did a project in, in Sierra Leone with my wife, as of today, my wife. And we put solar and batteries into a neonatal clinic, which was suffering from power cuts. And the babies need, they need warmth, and they need oxygen, and 20 minutes without main power, and they start dying. So we put in power there. But the opportunity to do medical devices that are very much lower power, energy efficiency plus solar supply, is very compelling. Particularly, you know, in this pandemic, we now realise just how important that is to get medical services and just ticking boxes and saying countries have got access or this village has got access. These many people have got access, if it's not reliable, it's not really it doesn't do the job, does it?

No, not at all. And certainly one benefit. I mean, there are no benefits to COVID. But to see people focus on better health care delivery in the developing world and using clean energy and distributed energy to do that is at least some kind of a silver lining and although it's been involved in that as well, but it's so critical.

So let me give a plug for anybody who's listening or watching to 'Cleaning Up' Episode Number 16, which is in fact airing as we film this and as they count the votes in those last few states in the US presidential action, Episode 16 is with Kandeh Yumkella, who was the founding leader of Sustainable Energy for All. And so those who are interested in those issues should as soon as

this episode is over, not before, go over watch episode 16. So I want to come on to the Hawthorn club. Meade Harris. Just this extraordinary visionary decided that women in energy needed their own networking organisation. Or was it you that gave her the idea? or How did you... tell me how you got involved?

Long before I met her. I mean, she's a diva, she's just incredibly energetic and she flies from London to Melbourne, like most people, you know, go to their favourite lunch shop. She's just been peripatetic. And that's

not right now she doesn't Australia has locked down. There are no international flights. Normally, but normally, yes.

I think she did one of the last events before the lockdown in Australia. Yeah, so everything's virtual now. And we've done a lot of zooms together. But yeah, I mean, the ability that Meade has to bring together what's really neat for me is that, obviously, I'm very connected to the clean energy community, and derive a huge amount of support and value from that. What I'm less connected to is the more traditional energy, the historic energy industry. And what's great about the Hawthorn Club that brings senior women together across the world, from old energy to new energy and everything in between. And so instead of just talking within our bubbles we, you know, have lunch with or dinner with or drinks with women that have accomplished a huge amount in sectors that like I don't know much about and even some that I feel that you know, need a lot of improvements. So it's a great way to broaden your understanding of how energy has evolved over the years and meet amazing women in the process and Meade just you know, deserves a huge, huge debt you know, I over a debt of gratitude and she brings together you know, Mary Nichols, I mean e the public sector, the private sector it's just a great, great opportunity and having you there as our, our joking man... You have such a sense of humour and you're really good at helping us with, with so many of our programmes...

That's quite a hole, you're digging for yourself. So I'm the token man, but it's okay, because I got a sense of humour.

It's a pleasure to have you as part of our advisory board,

I met, I met Meade because in 2015, I wrote a piece about the need for inclusive energy. What I said was that we've got this incredible transformation going on in the energy sector. And it is inconceivable two things are inconceivable one that it could possibly be as fast and effective if 50% of the world's population is underrepresented in that transformation. And the other thing that is absolutely inconceivable is that at the end of it, that management of the energy sector would look just the same as it did before basically, a load of, you know, in the developed world, a load of sort of middle aged white man running everything. That's not what it's going to look like. So I wrote this piece, and I met Meade. And I've thought what she was doing was tremendous. And she invited me on the international advisory group, and I am now the token.

Well, I think she'd be actually very unhappy for that with those words to be used. I think she would. I am the only guy but I don't think I'm a token at least I hope not.

I was joking. I was joking.

That's okay. Yeah, you're forgiven as always. But we do need to get Meade on to cleaning up to talk more about that. But we've talked about how you are as an investor only as good as the soil in which the ideas that you come across falls, you are the sum of your experiences, you're the sum of yourself to your past, your persona, because that's what helps you know, whether you should or shouldn't make these investments and helps you to see them. To what extent do you think the fact that you are a woman and one of the few women venture capitalists, frankly, in the industry, how has that helped you be so successful or hasn't it?

Well, I don't I would say that it actually has been helpful because there is a novelty factor. And while there are obstacles in your path, as long as you know, I was lucky and that when I went off on my own, I had worked for a long time. And so I had a network I had <inaudible> a very supportive bosses, most of them male. And so it's not just the soil that you <inaudible> it's your network, your <inaudible> and, and the, and the credibility that you can establish. And so I think that, for me, there were so many... having worked for so many years, there were people that valued what I did, valued my perspective, and when it became clear that there was a shot to do something that was out of the ordinary to start a firm or fund in, in this new intact space. And as... with a woman leader, they, you know, they don't get they didn't get that chance very often. And so in some ways people go out of their way to help you because they realise, you know, what a desert it's been. And so, as a pioneer, they didn't have that many choices. And so I was the beneficiary of kind of a goodwill and not really having many outlets for that goodwill, a part of some senior people that were in my network.

Okay, so that's very interesting, because if I summarise correctly, it's not so much that you saw deals differently. And it made you a different person who sees value, but that there was definitely some advantage to being just very successful and very good at what you do, but also one of the very few women that you know, that was out there that could manage money on behalf of the investors.

Yeah, I think it's both I mean, this, the more integrative approach that you take, as an impact investor looking at social trends and gaps in in policy, as they relate to innovation. That's how we got to many of the very successful companies that we've invested in. It wasn't the linear just what's the latest technical gizmo that is better than the 10 others out there? So it is much more highly differentiated?

Nancy, that's probably a great question on which to leave this because we are out of time, the question of whether women investors bring a different perspective, which helps them to unlock different sources of value in deals of all sorts, not just venture deals, I'll have a think about maybe bringing in some of the Hawthorn Club's members. And we can dive into that question. And certainly in venture capital, there are still so few women, and so few entrepreneurs, CEOs of venture backed startups, that it's definitely one of the most important questions I think, that we could look at. But I would like to thank you for joining me on this election results day. I'm sorry that I dragged you away from your, your phone and from the results. Hopefully, there'll be some good news when we finish this recording. But it's always such a pleasure to talk to you.

Well, and likewise, on your special day, personally, and on this very special day for the United States and the rest of the world. It's a pleasure to take time and reminisce and also but also to, to identify how important this field is. And you've played such a critical role in spreading the word and database coverage and insights. And, you know, just, it's uplifting for me, and it just feels like we are just getting started. I mean, and now, with a little luck, we'll have you know, the wind in our sails. And we'll get to that point where, you know, our children and our grandchildren will wonder, Well, why didn't you do this a lot earlier. And when they look at that podcast, look at this kind of a discussion. They'll realise. Well, it wasn't as easy as you think it was. But it was a lot of fun.

Now that's right, I think hopefully, they will look back and understand that there were these eras, and you couldn't do in 2013 what we were doing in 2020 or in 2010 or in year 2000. But you've been such an integral part of that, that when they do write that history. I know there's going to be a chapter on Nancy Pfund. Thanks for joining me.

You're very kind. Thank you It's a pleasure. And I look forward to our next randez-vous, which I hope will be in person.

Very good. Thank you. That was Nancy Pfund, one of the very few women running major venture capital companies, and also one of the most successful venture investors of our times, and an early investor - 2006 - in Tesla and a former board member. My guest next week on cleaning up is Mike Bennetts, he runs Z Energy in New Zealand, that's the fuel distribution company. He's an extraordinary visionary though, working to prepare that company for the transition to net zero, which is the pathway New Zealand is on. He's also the founder of New Zealand's Climate Leaders Coalition. That's a group of business people who've got together to chart that path to net zero, and to lead as quickly as possible in that direction. He's a tremendous, charismatic, visionary figure, I think you're going to enjoy next week with Mike Bennetts. If you're enjoying 'Cleaning Up', then I have a favour to ask. If you're listening on Apple Podcasts, please give us a five star review that really helps us move up the search rankings. Similarly, if you're watching on YouTube, then give us a thumbs up. Again, because it helps more people find 'Cleaning Up' and enjoy these conversations with extraordinary people. And don't forget that you can also subscribe to alerts in a number of ways so that you never miss an episode. There's a newsletter alert, you can subscribe to on cleaningup.live on the internet, or you can follow @MLCleaningUp. That's @MLCleaningUp on Twitter, and of course on podcast platforms, you can just subscribe to cleaning up. Thank you very much. Let's get the word out. And finally, I'd like to thank our new sponsor the Gilardini Foundation. Until now I've met the very modest costs of Cleaning Up myself through the Liebreich Foundation. The Gilardini Foundation's support will enable us to get the word out to a bigger audience and we're very, very grateful.

Ep18: Nancy Pfund 'Women backing Winners'

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