David Friedberg — How Technology Solves Our Climate Crisis

Channel: Alex Kantrowitz

Published at: 2023-02-15

YouTube video id: HYD45v7vg9w

Source: https://www.youtube.com/watch?v=HYD45v7vg9w

hey Dave welcome to the show
thanks for having me excited to be here
thanks for being here we spend a lot of
time paying attention to the big tech
companies Facebook Google Amazon Apple
Microsoft a lot of time talking about
Twitter a lot of time talking about AI
on this show we're probably going to get
to that as we continue this discussion
but I think rarely did a headline spend
enough time focused on how our
technology can help solve some of the
problems that we're seeing with our
climate crisis and I think having you on
you're actively working on these type of
uh problems is a great opportunity to
dig into this in a way that doesn't get
enough attention that's what this
podcast is all about so uh why don't we
start here what is the state of our of
of the planet right now in terms of
where where the climate is uh what what
are the just give us like the high level
view of of the problem and then we'll go
into some of the technological solutions
uh it's a controversial question because
you know some people will make the case
that we're
uh you know not
um seeing the effects as
were predicted on the time scales that
were predicted and some people will say
that we're seeing worse effects
um the key metric obviously that a lot
of folks look to as being kind of
um you know the physical driver of the
predicted effects of climate change is
the concentration of atmospheric carbon
and you know the simple equation is
carbon and carbon out how much carbon
are we putting in the atmosphere how
much are we pulling out or how much is
the planet pulling out in the oceans and
in plants and so on
um and so that number you know continues
to rise we also algor's Inconvenient
Truth and so so much of the kind of
investing and Technology Community
that's oriented around solving problems
associated with climate change really
focus on that key metric which is uh
carbon reduction or the replacement of
traditional systems that are used to do
things mechanical systems to do things
that emit carbon into the atmosphere in
the process so you know there's no
really good line of sight to when we're
gonna stop um increasing the uh the rate
of carbon emissions into the atmosphere
there's efforts on energy and
transportation and food
um you know uh there's there's a ton of
capital uh being organized around that
as the key objective is to reduce that
carbon emitting
um number
um but uh yeah we don't have a like at
this point a good predictor that says
we're still everyone still feels rather
anxious
um
you know my personal point of view is I
am not that anxious
um I'm not that anxious because
I do see a portfolio of technologies
that are developed or developing
and
um those Technologies are not just about
doing good for the planet
they're just better business sense and
what I mean by that is
um they make stuff that's cheaper and
better than the traditional way of
making stuff or doing stuff uh and if
it's cheaper if it's a better economic
alternative customers the market will
adopt it and if the market adopts it
then that technology and that system
becomes standardized becomes proliferant
and if it happens to put less carbon in
the atmosphere then that is a fantastic
side effect of the adoption of that
technology so you know renewable energy
production is one that everyone's
touting because we're seeing industrial
scale renewable energy like solar and
wind
cost less now
than
um traditional petrochemical driven
electricity production uh you know as
low as under three cents a kilowatt hour
and you know
um we're typically looking at about 10
to 15 cents a kilowatt hour uh for
traditional coal and natural gas power
so um so if that technology is cheaper
then it is better and the economy will
move forward and I think we see this
just across uh the gamut whether it's in
agriculture or you know animal
agriculture is a huge emitter of carbon
uh or in energy production or in
transportation or in manufacturing there
are technologies that in the absence of
being carbon emitters or not carbon
emitters they're just faster cheaper and
better and those Technologies are moving
us forward improving economic
productivity and they happen to also
have lower uh carbon emissions and so
that's why I'm fairly optimistic because
I just see all these new systems coming
online and all these Investments to move
the economy forward across all these
industries that are is better and they
also emit less carbon so that's a you
know kind of a why I'm not too anxious
and I'm fairly optimistic and then
there's also these big like
step change Technologies like nuclear
fusion which are on the horizon that
seem to finally be real and if those
happen then you can not just see the
cost of energy go super low and have no
carbon emissions but you can actually
see energy production go up by tenfold
or 100 fold which is another game
changer for Humanity so
um that's why I'm pretty pretty
optimistic I'm seizing on this faster
cheaper better part of your answer and I
want to put a pin in that to come back
to it later because I want to ask this
other foundational question as we get
going which is
during covid one of the things that I
came to the realization of and I think a
lot of people who were watching our
reactions some of the preventative
measures
was that if we put this task of trying
to save the environment or try to
protect population at large to the to
humanity
as a whole we're just not going to get
the responses like I thought that if
we're not gonna for instance follow some
of these uh rules and restrictions when
or we're gonna fight these rules and
restrictions when we know that they can
directly save human lives in front of us
then this idea of taking human behavior
Human Action to help this far away
problem of climate crisis seems unlikely
so I'm kind of curious like what your
perspective is can we leave it to
people's behavior changes to help get us
out of this crisis or is it more of a
technological solution then maybe we
come back to this faster better cheaper
idea yeah so
um we've never saved the World by
assuming that everyone's going to do
good together
okay and Humanity has faced existential
crises
uh for 200 000 years right like um I say
humans were roaming The Plains of the
Savannah without any food uh and we were
just eating scraps that were left for us
on the ground and eventually we figured
out how to engineer the Earth to make
food for us and that was the dawn of
agriculture
um and it wasn't this like Collective
let's all eat less effort folks ate what
they wanted to eat and ate what they
could get their hands on they didn't
take food and not eat because other
people were hungrier or more starving
than them social consciousness
um makes everyone a socialist
in a nuclear situation meaning you know
you will give stuff up for your family
that you live with you will maybe give
some stuff up for your neighbors that
you live on the road with
and then as you start to get wider and
wider you start to care less about those
people being taken care of by you in
fact those are the folks who are
competing for resources against you
so every human has this innate
Drive
um called desire and desire means I I
want to have what I don't have and so
you always observe that which is in the
world outside of you and there are
things that you see in the world that
you don't have and you say I want to
have those things and that's what drives
Humanity that's what drives the
individual human
now you're willing to give those things
up to take care of those around you that
you care about but at some point you
can't take care of everyone and so the
people you can't take care of become
your competitors for resources and
that's how tribalism and you know nation
states and all these things that create
distinction between large groups of
people arise and in fact when it comes
down to it
um even though it's nation state
collectives may fall apart as we've seen
in civil wars in the past when resources
become scarce and folks want more than
they have and then they start competing
within their nation state and things get
ugly
so that's that's I think a really
fundamental psychological premise and
history has proven it time and time
again the only way out of these problems
is by inventing cheaper and better
Alternatives like agriculture we realize
we could put seed in the ground when we
put a seed in the ground a plant crew
and then we could eat the plant a few
months later that was this kind of you
know ingenious Discovery and this
ingenious invention and then we started
to develop irrigation and all these
systems where we could
um engineer the natural ecosystem around
us to make stuff for us
um and then everyone had more everyone
had abundance and the the rate of desire
and the rate of competitiveness went
down and there was errors of peace and
areas of abundance that arose and this
has been the case with every step change
of Technology since the dawn of humanity
we identify some way to engineer
something novel create an era of
abundance and these social conflicts
kind of die down
um
if you think about the planet today
there's about 95 percent of the world's
people at the end of the century based
on recent population
um forecasts we'll call it 90 of people
that will live in Africa and South Asia
okay 10 of the people will live
elsewhere So within those two regions
you have a group of people that are
rising in income
and you know when you go from making six
thousand dollars a year to Thirty or
sixty thousand dollars a year let's say
six to Thirty like has happened in China
in the last 30 years
what happens with that population well
suddenly they have more resources and
they want more stuff and they can see
more stuff they're not oriented around
let's save the planet those individuals
those families the people that live
there say I can now feed myself twice as
much I cannot buy twice as many pounds
of meat each week because that's
satisfying to me and that consumptive
pattern is what really drives the core
problem you can't assume that social
Consciousness will arise and everyone
will suddenly stop this natural Drive of
desire and then they move up the
economic ladder they have access and
opportunity to buy new stuff and then
assume that they won't most of the
demand will come from that emerging
developing class and as that happens
they're looking for more resources so
the only way we can solve the problem
is if we give everyone an alternative
for energy for food for materials that
is cheaper and better versus trying to
convince them to do good for the world
because they have other priorities and I
think that's like a really core thesis
here which is the only path to
sustainability is a sustainable business
meaning it can make money by selling a
better cheaper product
okay so so I'm definitely hearing from
you that it's a technological solution I
would agree that it's a technological
solution as well when we get towards
figuring out how to answer this these
questions on climate
the thing that I'm not understanding
maybe you can unpack for me is
when you talk about production right
we're producing I think you said better
cheaper and faster faster better and
cheaper
we're still producing more and it does
seem to me like you produce more you're
using more resources
so
how does producing faster better and
cheaper if we're going to be producing
for a planet
you know again that's not going to take
these mitigation efforts on their own we
know that how does that solve the
problem
yeah this um this gets to a first
principles of physics question and also
one um where we talk about uh leverage
or productivity so the key term to think
about is productivity productivity is
this basic principle that defines how
much unit of output you can get per unit
of input okay so if you can change the
productivity of doing something or
making something by a significant fold
you can make it cheaper and make a lot
more of it I'll give you an example
today it takes 30 units of energy to
make a unit of beef okay so if you
measure beef in terms of calories to
make one calorie of beef takes about 30
calories of energy across the whole
system
and it also takes several years because
you have to grow a corn and then you
have to move it to feedlots and feed
cows and then process the cows and ship
them to the restaurants so you're moving
molecules around you're using a lot of
energy so it's about a 30 to 1 energy
conversion ratio so what if and what is
beef well beef is just four elements
carbon hydrogen
oxygen and nitrogen
primarily so if you can take those four
elements and reconstruct them in a
smarter cheaper better way into the
cells of beef into the protein of beef
and it's chemically identical it's the
exact same thing as beef you just didn't
happen to use the whole cow to make it
and you could only use say five calories
of energy to make one calorie of beef
well now you can make six times as as
much beef
with um Prosperity or you could make
three times as much beef and CH and chop
the price in half
so that's how productivity works and
technology is what allows humans to
improve our productivity when humans
first formed the earth when we first
started with agriculture we did
everything manually we used you know
sticks and we moved them through the
ground and we put seed in the ground we
harvested them and then the tractor came
along and now instead of farming one
acre per person per year one person
could Farm 40 acres per year and
eventually 400 acres per year and if you
go to Australia today you'll see Farmers
farming wheat across 10 000 acres per
farmer per year The Leverage we get on a
unit of time the leverage we get on a
unit of energy has gone way way up and
so we can now make more food and make it
cheaper and that's because of the unlock
enabled by all the technology youth in
agriculture to make that possible like
the tractor Precision agriculture
software to drive those tractors Etc so
that's what's really I think key for
folks to understand
is how critical
um productivity unlocks can give us more
and give us at a lower price um and
that's where I think we start to beat
the climate change problem
and so how do you outpace then what we
have what you're talking about in the in
the earlier part of this conversation
where we have not only more people who
are starting to consume more but also
population growth so I just looked it up
we hit a billion people on the planet in
1804 2 billion in 1927 now we're in 7
billion range I mean this thing is
growing you're you know your
entrepreneur you do you know you know
how software works and when it comes to
exponential growth this is your
territory so do do our productivity
gains then offset the the you know
coming the additional Supply and I mean
sorry the initial demand yeah the
incremental demand yes they do
um now there's also another important
factor which we didn't realize
until we got rich as a species as
um as we have more
we actually reproduce less
and this is a really weird socioeconomic
statistic that seems to be emerging now
um
reproduction
seems to be this
um output
of scarcity
um that in fact the less income and the
more challenged uh people are the more
the higher their population right that's
a very big generalization but there's a
lot of these charts that and data that
can kind of demonstrate that as more of
the world has become industrialized and
developed and more people have a grocery
store they can walk to to pick up food
more people have a clothing store they
can get clothing from more people have
comfortable uh warmth and heat and
shelter
um they tend to reproduce less they have
fewer children
there's a lot of theories about why this
is
um but regardless you know it could be
related to comfort and feeling less
distressed and so you don't need to kind
of get more uh
um uh it may be a function of just my
time I'm satisfied with how I'm spending
my time uh whereas uh humans in the
absence of satisfaction with their
condition in the world they seek
satisfaction through having children
um there's a lot of theories for this
I'm not going to kind of uh try and be
too predicted or too
um theoretical here but
um this is an important statistic
because what we're seeing now is
actually a plateauing in global
population and some countries like China
are now predicted to see their
population shrink
um so number one we've got this massive
kind of Technology Improvement that's
being realized across every industrial
sector
um and these new technologies that can
be game changers meaning you know 10x or
more Improvement and cost or output
um and we have perhaps a shrinking
population base across the developed
world
so you know keep that in mind that the
challenge of climate change being driven
by people
um is uh
um is less about population growth at
this point uh and it's it's just much
more about
um you know what technologies are being
adopted and utilized
okay and so we've talked theoretically a
little bit about how we end up being
more efficient and cheaper and better in
terms of the things that we produce and
obviously this is going to come down to
Agriculture and other forms of farming
that the actual production and then of
course industrial the industrial side of
things and you're particularly focused
on the agricultural side how do we bring
technology to bear in order to make us
more efficient when it comes to farming
and I'd love to hear a little bit from
your perspective of what's going on with
one of the companies that you're
involved with lavoro and how that
actually helps solve some of these
issues that we're we're talking about
so um when you look at where Global
calories are produced and consumed by
country
um you kind of see countries that are
importers and countries that are
exporters
um you know countries that don't make a
lot of calories because they don't have
the land
uh to do so to make their agricultural
system can't support it
um they have to import they have to buy
uh by food so countries like Tunisia
Egypt Somalia Ethiopia much of the Horn
of Africa a huge population-based net
importers of food then there's places
um and then the biggest exporting Market
is Brazil and Latin America so the US is
the largest agricultural products
exporter but we're not really growing
that amount very much
um where it's growing the most is in
Latin America so Latin America is Big
fertile ground unfortunately so much of
it is or was rainforest land which is
there's now a lot of restrictions that
are prohibiting the
um continued kind of growth into the
rainforest uh but with just the land
that's not rainforest today
there's a tremendous amount of calories
being produced in Latin America as a
region exports twice as many calories as
the U.S so the Latin American Market is
growing and the farmers down there are
becoming very sophisticated you know
they make uh nearly uh 10 times as much
profit in terms of their margin their
operating margin as a U.S farmer
um and they're typically 40 years old a
U.S farmer 60. so you know what lavoro
is is these guys are the retailers to
Farmers meaning they meet with Farmers
every week help them make decisions on
what to do with their Farm what
technology to use how to use the
technology they sell them their seed and
their crop protection and fertilizer
products and they make a margin doing
that so we did this investment and this
this merger with lavoro that we're
hopefully going to close here in the
next uh two weeks or so
um
where as the largest agricultural
retailer in the region uh in Brazil
um they have this access to these
farmers and where we're particularly
interested is how do you bring new
technology to the farm that helps
Farmers improve their productivity like
I mentioned earlier
software being used in tractors allows
Farmers to massively increase their
yield per acre which means getting more
per acre of land every year and it's not
about putting more stuff in the ground
it's about putting the right stuff in
the right part of the ground so you can
actually use less inputs and get more
output and so um you know software
adoption by farmers in Brazil and in the
region is negligible compared to the US
these tools are available they're here
so we're investing in this company and
then we're going to help them bring
software tools to the market and other
emerging Technologies like Biologicals
to help farmers kind of improve their
productivity and the sustainability of
farming and that's why we're so excited
about it they have the largest footprint
they reach more Farmers than anyone else
and so we're going to have a really key
role we're taking I think three out of
seven board seats to help make this
happen the other area that's that's
super interesting
um I'll just talk about Biologicals for
a second so in agriculture farmers put
three things on the ground they put seed
they put fertilizer and then they put
what's called crop protection these are
things that keep insects and bugs and
fungus and weed uh weeds and all this
stuff away from the farm uh because as
soon as that stuff gets into your farm
into your crop your yields go down you
get less per acre
so um it turns out that there are little
microbes in the soil you know if you
take a teaspoon of soil there's about 10
billion unique microbes in that soil and
those microbes these little bacteria and
yeast and fungi are doing all sorts of
interesting things they're making
chemicals they're eating chemicals
sometimes they can actually make
fertilizer from the atmosphere sometimes
they can keep insects away
so there's this emerging category of
technology and agriculture that's really
just nasic it's about 10 to 20 years old
now where we've identified how we can
take bugs little microbes from the soil
and use them to replace traditional
agricultural inputs like fertilizer and
crop protection products fertilizer and
crop protection products are usually
very carbon and energy intensive to make
and they can also be persistent in the
environment and not very healthy so by
pulling those out of the equation and
putting natural microbes into the
equation you can start to kind of
re-engineer how we're doing agriculture
in a more sustainable way and it's more
productive for the farmer and it costs
less so um you know we're really excited
about the opportunity for biologics
these guys have a huge biologics
business as well
and we have a couple uh companies in the
space that were that we've partnered
them up with one's called pattern AG uh
to do soil testing for farmers and then
figure out what microbes are in the soil
and then make recommendations on
products to use and then bringing new
microbes to the market so I think that's
a big
um exciting effort that that we're
thrilled to be a part of because it
means you know again going back to the
sustainability point it's better for the
planet and it makes the farmers more
money and it gets more yield per acre
and this is some something that levoro
is doing yeah they have a business unit
called crop care and they have
um all these products in there and then
we have other businesses that we're
going to partner with them to try and
accelerate and expand that work I want
to get a little bit nerdy for a second
and talk about how lavoro is at the
moment looking at which parts of the
field are producing what type of
product and then deciding how to treat
them differently and how to get more out
of them can you can you talk a little
bit about you said that you want to
introduce technology there can you talk
a little bit more about the technology
that's involved
yeah so so my last Company the company I
started in 2006 I left Google in o6 I
started a company called The Climate
Corporation and we sold it in 2013 it's
become
you know very much the the largest
software platform used in agriculture
today through Monsanto through Monsanto
which is now part of Bayer so it's
called Bayer field of view I think or
Bayer climate field you know
um
and so there's about 180 million Acres
globally that use that software
um you know just to give you a sense of
scale the U.S Corn Belt is about 160
million Acres so pretty good footprint
on that product now this is a whole
um area of Agriculture called Precision
agriculture or predictive agriculture or
digital agriculture you can use these
different you know names
and the idea is historically a farmer
would look at his field and he'll say I
have a good gut I have a good sense I
have a good intuition about what to do
with my field and so I'm going to go use
this seed and this amount of fertilizer
and then he'll plant it and what's
possible now that wasn't possible 30
years ago is the ability to get data
from that field that can help that
farmer make a more informed choice about
what to do in different parts of the
field
is only a field because we call it a
field within the field there's many
different types of soil there's many
different types of terrain some parts of
the field water pool some parts of the
field are at the top of the hill some
parts have different bacteria in the
soil some parts have different amounts
of nitrogen or phosphorus or other
chemistry in the soil so if you can
understand and get data about what's in
different parts of the field you can
make different decisions about what to
do
and then all farm equipment today that's
made by all the big farm equipment
companies has what's called variable
rate control systems and what that means
is you can put different amounts of seed
different amounts of fertilizer
different types of seed different types
of fertilizer in different parts of the
field and it's all run by software so
you have an iPad in the tractor and you
write a prescription which says here's
what I want to print in my field and
it's a little colorful map and you click
go and the tractor or the sprayer or the
applicator go through the field and it
literally just prints your field it puts
different seed in different parts of the
field different amounts of chemistry
different amounts of fertilizer and then
boom you've now optimized your field
that was unfathomable 30 or 40 years ago
so digital Technologies like satellite
imagery radar imagery soil testing data
the variable rate control that's been
put on all the farm equipment it's all
working together now to give Farmers
these novel insights into what's really
going on in their field so instead of
using gut or Instinct they can now use
this data system to make a decision
about what seed to use and how much seed
and how much fertilizer and then
actually go out and print it in the
field and so that's transforming
agriculture it doesn't mean we're using
more stuff in fact more often than not
you use less stuff and you get more out
and so this is a really kind of
important advance for Humanity that's
part of a long trajectory of improving
productivity and AG
like I mentioned earlier we went from
humans farming by hand to you know using
tractors and then we had plant breeding
where we could develop bigger and taller
plants and all these different
Technologies over the years have
compounded
to give us this incredible output and
just to give you a sense of how quickly
this has moved in the U.S the average
corn farmer had about 90 bushels an acre
30 years ago or 100 bushels an acre 30
years ago and now they're you know at
over 170 bushels an acre today so you
know these Technologies are all
dramatically improving these outcomes in
Brazil the farmers are still getting
about 110 bushels an acre so there's a
lot in in China they're about 100
bushels an acre in Nigeria there's 70
bushels an acre
um or Kenya sorry um and so in all these
different countries around the world
with similar soil and similar climate
farmers are getting different amounts of
calories produced per acre so
Technologies allow them to kind of
Advance this so Precision or digital
agriculture is really giving everyone
this toolkit to make better smarter
decisions and to control those decisions
in the field that's cool and so kind of
coming back to your theme of better
faster cheaper now I'm starting to
understand it a little bit because if
you're able to get more yield out of one
field then a you don't have to use more
land exact same amount of crops and B
you don't need to cut down any more
rainforest exactly exactly the goal will
still probably happen but go ahead and
and put language
um uh back into conservation I mean
that's a big push here uh particularly
you know a lot of people think big AG is
bad but everyone that works in
agriculture has the same orientation
around solving climate change and
everyone says if we can put more land
back into conservation we win as a
species right now around the world we're
generating roughly 3 000 calories per
person per year so we are making enough
food around the world we have all these
supply chain problems that are causing
some people to go starving while other
people are you know getting clinically
obese but it's um
you know it's really fundamental that we
have the capability today to feed
ourselves and overfeed ourselves and so
we can put land back into conservation
and allow rainforests and forests to
grow back in the U.S we have a great
conservation program that's funded by
the federal government uh where Farmers
if they you know put land back into
conservation they'll actually get paid
to do this
um and now we're seeing in Brazil uh
this new president Lula has this similar
sort of push which is how do we save the
rainforest and put that land back into
conservation uh which is totally
feasible under these conditions
David Friedberg is here with us he's the
founder and CEO of the production boat
production board also a member of the
all-in podcast you probably know him
from there we'll be back right after
this to talk a little bit more about how
technology might be able to help the
climate crisis but really talking about
the business side of this is there is
there money to be made in working on
these businesses or is the market no
longer going to support this there's
there's definitely a question there
we'll try to answer them on the other
side of this break
and we're back here on big technology
podcast with Dave Friedberg he is the
founder and CEO of the production board
also former uh employee at Google maybe
we get some Google questions in before
we end this but let's just talk a little
bit about the business of this so first
of all you are trying to I think what is
it take liberal public with a SPAC it's
kind of interesting to hear the the
four-letter acronym spec it's had a bit
of a lot of work and
oh okay four is a four-letter word also
four-letter acronym but oh yeah it's uh
and actually maybe one of your buddies
has been uh has been part of uh the
reason why people aren't so excited
about it anymore so
um maybe we can talk about that but but
yeah I'm just kind of curious why is
SPAC and and what kind of interest is
there in in the business world for these
type of companies yeah well look I mean
facts have become a four-letter word
that's why I say that it's kind of a
joke in the markets um yeah when you
meet within Public Market investors like
no one wants to touch its back anymore
because so many of these collapsed after
people d-spack after these mergers these
back and that's because so many of the
companies that went public
ended up being
um
you know zero revenue or low revenue or
low margin businesses that had many
years ahead of them still they
you know some people will joke there's a
reason you know the public markets have
had their
um you know they're kind of uh
requirements for someone to go public
historically because the public markets
can't really stomach
um what Venture capitalists typically
fund uh which is long range uh sometimes
Capital intensive business bets
um that take a long time to prove out
so that doesn't even sound like a joke
to me that sounds like a legitimate
criticism of what happened that's right
and so you know a couple years ago and
facts have been around for a long time a
couple years ago obviously there was
this
um
this kind of positioning that we could
use facts as a way to get private
companies public sooner and give public
investors more access to private
companies what would have otherwise been
private companies and they would have
access to
um otherwise and the problem is the
typical investor base
you know as well what that's your
capitalists do is spend a lot of time
where they're supposed to if they do
their job spend a lot of time doing
diligence and understanding these
companies very deeply to determine what
are they really capable of what's the
risks and what should they be worth
based on the long-range outcome
potential of the business and also the
um the risks of executing on that that
outcome
um and so the idea of a spec making a a
private company public sooner than they
otherwise would have been able to go
public
um was kind of interesting because a lot
of public investors don't have access to
the Venture industry and Venture and
private Investments and so getting
access to these companies earlier was
appealing so that's what really kicked
this whole thing off I wasn't you know
um really involved in all that stuff
early on I think we're we're we set up
our SPAC vehicle and so the production
board uh you know we don't operate as
kind of a traditional
um
um you know SPAC uh sponsor uh we saw
the opportunity to have a vehicle
whereby we could find a strategic
partnership through that vehicle so our
goal was to find a large profitable and
growing business in one of the markets
that we work in which is food
agriculture human health
biomanufacturing and broad-level Life
Sciences so those are the markets that
we know well and what we wanted to do
was to bring one or more of our
technology businesses to partner with a
scaled business like this and use that
to accelerate that business's outcome
and that's what we found with lavoro
you know it's a business that's doing
um I don't want to mistake the numbers
but you know it's projected this
calendar year to do uh between two and
300 million of ebitda Top Line growing
40 uh you know north of two billion
dollar Revenue Top Line and market
leader
um in their uh in their industry and in
their their region so you know it's a
it's a profitable growing scaled
business
um and it's a market leader and it's in
a market we know well and you know so in
our kind of approach we were setting up
to bring one or more of our technology
businesses to help them we announced a
partnership between pattern Ag and
lavoro
um and so this is a very strategic deal
for and we're also investing 100 million
dollars you'll find very few sponsors
that are actually investing in the spec
that they're involved in yeah so we're
putting our own Capital At Risk where
you know we don't get these founder
shares we only get one third of the
founders we only get two-thirds of them
if the stock goes up 25 or 50 so you
know we're really aligned with with
shareholders but to your question it's a
total show out there
um you know spax have gotten uh such a
bad reputation because so many of them
are trading below ten dollars and uh
everyone thought that the company that
they were investing in was a good
company and then it turns out that they
didn't hit goals or didn't hit
milestones and the stock got beat up for
it and so every one lost money over and
over and over again so many of the
portfolio managers I've talked with in
the public markets have said
um I am just restricted I can't invest
in any previous companies anymore
because we've had so many scenarios
where we thought it was a good company
it was going to do well and then our
stock got cut in half and I lost X
dollars and so my boss or my boss's boss
said I'm fired if I put any more money
into any pretty decals so it's um the
vehicle itself is pretty distressed and
I would say broadly speaking I don't
think that there's going to be a quick
return to spec land
um anytime soon in fact I think it'll
only filter out to businesses like what
we're doing with levora profitable
scaled growing you know kind of where
you can measure it on its Financial
returns and results not kind of some
speculative you know out your outcome
um
yeah why not just go public through a
traditional IPO yeah so I think I can
say this um but they uh they had uh on
file a plan to do that uh lavoro
um and we through our because again
we're strategic investors and partners
so our partnership with them they've
they've kind of understood the value we
could bring to the table and that's why
we ended up working together on this
yeah I'm kind of curious if you're at
all a little bit annoyed with uh chamoth
who was sort of the number one
cheerleader for the SPAC vehicle and now
some of his specs are not doing so well
talk about the ones under ten dollars in
sofa which he was part of down 34 since
this back and 43 in the past year Virgin
Galactic down 30 percent 38 in the past
year and 50 since the last spec yeah
so I'll say a couple things um
there is not a smart
Silicon Valley I should say it another
way there are many smart Silicon Valley
VCS and investors who set up specs in
the last couple years okay so um and all
of them have stocks that are way down uh
so that that you know I don't think that
um singling out any individual uh you
can certainly do the same about anyone
that stood on a Podium and said buy the
stock on the SPAC sponsor uh and a lot
of smart reputable people in Silicon
Valley and across Wall Street and
celebrities I mean everyone did this
over the last couple of years so it's
been um I would say broadly uh a kind of
a a collective
um
concern on you know should people should
individuals be using their celebrity or
their influence to be cheerleaders for
stocks and whether or not that's a good
idea and we see that over time
the individual cheerleader for a stock
uh is probably just as good as you know
a monkey ringing a bell right I mean
look at the joke about Jim Cramer on
CNBC this guy has a TV show and there's
the joke that the inverse Kramer index I
think is up 20 on the Kramer index is
down 17 meaning like if you bet on what
he said to do uh versus the opposite
um and he's you know up there on TV
every day cheerleading people to buy one
stock and sell another so generally I
think that that's probably a bad idea is
to be kind of a stock cheerleader uh or
denouncer
um
and uh and I think like you know the way
that this is all kind of playing out a
lot of people are hitting themselves on
their head I've spoken to a lot of my
friends who became SPAC sponsors and got
very vocal about some transaction they
did and are just feeling like honestly a
little dumb they're like how did I get
caught up in all the hype in the
hysteria
um and uh and they regret it I will also
say that as you know broadly speaking
growth stocks and the tech Market
um because it's so growthy have had
massive Retreats right like like growth
stocks in aggregate not just with specs
are down 60 70 I mean Google was down 55
or 50 last year or something so it's not
just spacks that got beat up spax were
part of a broader kind of tidal wave of
reset away from growth towards value
that happened in capital markets over
the past year
um and spax certainly get a bad rep but
um here's another statistic I'll tell
you I think I've mentioned this on the
podcast but 65 roughly of companies that
went public so since 2020 whether that's
through SPAC or IPO
65 are trading below
um the uh the total cash they raised as
a private company as a as a tech as a by
VCS so they're so low in value in
aggregate that they're actually worth
less than the money that went into them
so about two-thirds of them uh it's an
incredible statistic so it's not just
about the underperformance of businesses
it's about a fundamental reset of value
um that's broadly affecting growth
and I think that its facts just became
the sort of poster child for this I mean
Google did drop in value but at least
there's something there uh for a lot of
SPAC companies people sort of looked up
and said where's the cream feeling but I
want to ask you about that the biggest
problem with facts is that they were
sold to retail investors and that's
where people felt really shafted
traditional IPOs get sold to these
institutional investors and they're
typically the main holders and you don't
have someone going on a road Show
pitching a company like that to the
public spax did and that's the circus
problem when you have kind of a
ringleader in a circus and they go and
tell everyone buy the stock buy the
stock they're putting themselves on a
Podium lots of people buy the stock all
these individuals that otherwise kind of
aren't typically in these markets and so
it's a blessing and a curse it's a
blessing and that they are kind of being
shown and given access to things they
otherwise wouldn't have the problem is
they kind of end up in things that lose
money and then the person who stood on
the podium is to blame and the whole
vehicle is to blame
um and so I think that that's certainly
a big part of what's gone on with specs
in addition to you know the fact that
all so many of them were speculative out
your businesses meaning they have to do
something in your four or five to be
worth what they're what you're paying
for today right right and then just the
timing was was tough with the FED yeah
that's a good point let's just talk
quickly about whether there's a market
for some of this climate forward you
know for lack of a better term type of
technology or productivity enhancing
type of Technology when it comes to meat
and agriculture there's uh there's you
know the there's obviously been some of
those companies that are doing the
better faster cheaper when it comes to
meat that doesn't come from the cow I'm
kind of I would love to hear you react
to these statistics so beyond meat is is
one of them and it's down more than 80
off its all-time high and impossible
Burger has done layoffs and uh laid off
more than 20 percent of its staff these
were some of the poster children this is
coming from Derek Thompson's plain
English podcast what's your perspective
on where this this sort of Cadre of
companies sit right now and and do you
think the market will have appetite to
to fuel the type of stuff that you're
you're betting on
yes especially in these current
conditions yeah so I'm not a so the
problem with impossible foods and beyond
meat and companies of that ilk is that
they charge a higher price
um than the alternative so ground beef
you know three bucks a pound roughly
um beyond meat impossible or like two to
three to four times that price
so I've always been negative on these
businesses I've never invested in them
and I've been um you know when people
have approached me about investing I've
said no and I uh you know people said I
was an idiot when beyond meat stock went
through the roof I'm like I don't know
man I don't think this thing's gonna
last long term
um just a matter of time because there's
just a fundamental consumer behavior
that will emerge over time that'll win
out which is if it's not cheaper and
better they're not going to want it so
you know five percent of people or ten
percent of people call themselves
vegetarian I'm vegetarian I've never
eaten meat in my life so yeah I don't
have a never know and so I don't have a
desire to go eat like a Beyond Burger or
impossible Burger
um you know it's got a lot of coconut
oil or other kind of deeply saturated
fat so it's um it's also not healthier
so the reason people buy it is to feel
better for the planet and to make some
kind of you know
um conscious decision
um and feel better about themselves so
what I've told people is that these
businesses are like luxury goods Brands
uh you know you can buy a a purse that
carries your stuff or you can buy Louis
Vuitton or Gucci purse and then feel
good about carrying a Louis Vuitton or
Gucci purse and be like look what I got
um there's nothing that's necessarily
higher utility for that purse uh it just
gives you a good feeling about the brand
that you're associating with and I think
the same is true of these you know fake
meat companies where you feel good about
buying them but you pay more and over a
period of time people are going to stop
doing that because at some point if
you're a meat eater you're gonna say why
would I pay eight bucks and I can pay
three bucks for a burger and it tastes
the same and it's better or or it's
better and you know I kind of feel like
I've done enough for the planet or I'm
doing good enough for the plant if I eat
it once in a while right so they don't
replace the salute the way to replace
the solution is to make ground beef
that's chemically identical meaning it's
the same product and it's made cheaper
and you just don't happen to use animals
so that's a tip that's a much more
technologically challenged problem
there's a lot of kind of work being done
around this now to your point about
Investors I think there is this
um this tidal wave right now of capital
going into green investing or
eco-conscious investing
um or whatever you want to call it
um and often the capital isn't doing a
good enough job of distinguishing
between high value luxury branded
Solutions which don't scale and actual
technological solutions which are high
risk but may but if they work they will
become really big and the problem is so
many of those Technologies are still
very nascent they don't make a cheaper
alternative today they're like the out
your kind of solution like we talked
about earlier and so um it's very hard
for cap so then capital is kind of
looking for a home and it finds its way
into the luxury goods business and so
you see this across cpg consumer package
Goods you see this across
um you know all these different
categories where all this money's kind
of pouring into these better for the
planet Solutions but because they're
more expensive they don't ultimately win
the market if they don't win the market
they actually don't help the planet that
much so to help the planet we have to
make the bets on the technology which is
long range and risky and you'll lose a
lot of money along the way and investors
have to be ready for nine out of ten
things failing but hopefully if the one
out of ten thing does hit it becomes
worth 100x
um and that that's I think kind of the
the real you know ratio of what's going
on in the market today
do you have time for one more question
about Fusion
so I think the big the big question
underlying all of this is can we also
become more efficient when we use energy
and you're a big proponent on uh
basically switching to Fusion so can you
talk a little bit about or or enhancing
our use of it can you talk a little bit
about
that solution and where it gets us
yes so fusion
um
Fusion is what goes on in the Sun so
uh protons
uh fuse and form uh so you know hydrogen
is one proton in the nucleus and when
you know those two protons
uh get enough energy and jam into each
other they actually fuse and they get
stuck together and they become a helium
nucleus a helium has two protons
um and so you have to have a lot of
density and a lot of energy to force
those protons close enough and the
reason is under
um the laws of physics that the weight
of two protons stuck together is less
than the or the mass of two protons
stuck together is less than the mass of
those two protons floating around alone
and the difference in that mass is the
energy that is released when they're put
together so that that is the physics E
equals MC squared physics uh that
actually drives the the core of Fusion
Energy uh as a source of energy so how
do you get two protons to smash into
each other they need to be really close
together firstly which means really
dense and they need to be moving at a
really high speed which means high
energy so how do you get the kind of
density and energy needed to make this
happen well the only place we see it
happening is in the center of the sun
it's not even the outside of the sun
it's all the way in the center of the
sun where this is happening
so Fusion aims to recreate the
conditions at the center of the sun here
on Earth in a controlled way and then to
pull the energy of that fusion reaction
out of a system and use that energy to
make electricity and that's the
principle that I think was first
theorized in the 1950s and ever since
then there's been this like endless
effort to try and make it a reality now
um the way we do it is we create a
what's called a plasma which is where
you take you know a hydrogen in the form
of What's called the ethereum and
tritium these are like heavy this is
like instead of having just a proton you
also have a proton and a neutron stuck
to it
um you spin it around in
um you know some sort of system or you
you energize it and it gets so energetic
like a hundred million degrees Celsius
that all the electrons fly off and you
just get these protons moving super
super fast and then you use magnets a
magnetic field to squeeze this proton
plasma together this plasmatic really
close so that's how you get density now
think about taking a balloon and trying
to squeeze it squeeze it squeeze it if
you try to squeeze a balloon to 1 100th
of its size when it's filled with with
air
how hard would that be you have to get
your hand around the whole balloon you
have to squeeze it and if any tiny hole
shows up in any part of your hand the
balloon will pop and all the air will
get out and that's the challenge with
plasma Fusion is if you can't squeeze it
and there's a tiny break in the magnetic
field all the plasma gets out it doesn't
cause a big explosion or anything
because this is generally pretty low
energy so
um so the whole point of fusion is you
kind of are trying to control a magnetic
field and squish all these uh protons
together and drive this energy out of it
and that whole system
um people have tried many different ways
and many different architectural designs
things called Toca Max and stelerators
and all these fancy words lately they're
these kind of pulsed plasma you know
systems uh all sorts of different
technology Concepts
I think that what's going on right now
um generally speaking and the reason
that we're all getting very optimistic
two years three years ago there was
about seven Fusion startups today there
should there's roughly 70.
um so there's this massive proliferation
and there have been a bunch of technical
breakthroughs that have been
demonstrated in the last two years
what's really happening um is digital
technology is allowing us to do things
that we historically could not do
um at a scale of physics that allows us
to control these systems and make them
work right so when I say digital
technology I mean to control the
magnetic field you have to make sensing
and adjustments in 10 to the negative 15
seconds okay that's how like the speed
at which you have to sense and and
respond uh to perturbations in the
plasma and change the magnetic field is
so minuscule that you have to get
Computing working right you have to get
sensing working right you have to be
able to get perfect measurements of the
field all of these underlying digital
Technologies and better sensors better
semiconductors better superconducting
materials better compute power better
Computing better models AI driven models
they're all coming together to finally
give us this really difficult
engineering capability of causing
man-made Fusion and when you do this you
get this energy out of the system you
you know you generate electricity and
hydrogen is you know deuterium is
roughly you know completely abundant and
infinite on Earth so theoretically
humans could make infinite energy on
Earth with all the stuff we have around
us using Fusion if we can make it work
it's not radioactive I mean generally
there's some Isotopes in the thing that
that generally let me just say that's
not radioactive there's no heavy
elements it's not like uranium or
plutonium that you're breaking apart to
release energy you're sticking hydrogen
atoms together uh to create energy so
it's super clean it's super abundant
it's technically very difficult if we
can do it and we can do it scalably then
it's theoretically possible that
Humanity can produce 10 or 100 times as
much electricity per year as we do today
at a cost that is 10 to 100 times
cheaper than we do it today that's what
is so exciting to everyone because
that's sort of a breakthrough doesn't
just solve all of our energy needs and
replace all the carbon emitting stuff it
creates entirely new industries that are
not even possible or feasible today and
if those Industries get created it will
be another kind of sea change of
abundance for Humanity that makes us say
holy crap I cannot believe we ever lived
in a world that was different than this
we're going to feel completely awashed
in anything and everything we ever
wanted
um and so that's what's kind of so
compelling about it I think that the
digital Technologies are causing this
big shift on the win rate and we're
starting to see some of these work now
of those 70 companies which ones are
going to win I have no freaking clue I
don't know which of them are real I
don't know which of them are fake which
of them are schemes which of them are
going to actually have the technical
breakthroughs which of them are going to
fly through the wall but I will tell you
that I would bet on the portfolio and I
would say there's probably a 90 plus
percent chance or 95 chance that we will
have scalable Fusion Energy in the next
decade or two and it will become a big
change for everyone that's why I'm also
so optimistic uh because I think this
portfolio of bats with all these
different Technologies going at it from
different angles someone will figure it
out and and this thing will kind of get
there
Dave this was awesome thanks so much for
coming on thank you for having me it's
great