Week 1150

I took this week off from work to just read and relax here in SF.

I spent a lot of time reading up on the climate tech space. I first read “Losing Earth: The Decade We Almost Stopped Climate Change” by Nathaniel Rich which was an insightful depiction of human psychology and how it affects policy decisions. The article discusses the time period of 1979 - 1989 when the alarm bells on climate change were first raised to the public. Rich details several moments where the US government got very close to signing a binding climate agreement but fell short each time. We’ve basically continued this cycle of inaction for the past 4 decades. Here are some details I found interesting:

• The world has warmed over 1 degrees Celsius since the Industrial Revolution
• If we reach 2 degrees warming, we will cause irreversible long term planetary damage
  • Eg. extinction of tropical reefs, sea-level rise of several meters, abandonment of the Persian Gulf
• 3 degrees - short term damage such as loss of forests in the arctic and several coastal cities
• 4 degrees
  • Europe and many parts of Asia stuck in permanent drought
  • Polynesia swallowed by sea
  • Colorado river reduces to a trickle
  • American southwest becomes largely uninhabitable
• 5 degrees - end of human civilization?
• More details can be found in this NASA report

It’s hard to give an exact prediction of when these events might occur. Estimates provided in Rich's article state that if we don’t do anything about climate change and continue polluting at increasing pace, we are on track to hit 2 degrees and even 3 degrees warming around 2035 to 2050.

Last year, The Inflation Reduction Act (IRA) of 2022 was passed and it is the most climate-forward piece of legislation that the US has ever enacted. I spent some time this week reading up about the IRA. From my POV, I’m interested if there are any service businesses that could be viable as a result of the IRA. I currently don’t have much skills or knowledge outside of the software engineering world so potential SaaS opportunities are my main focus as I read through.

The incentives outlined in the IRA provide tailwinds for clean energy projects that last until at least 2030. E2 created a nifty tool to track new clean energy projects since the IRA was signed into law on August 16, 2022. There should be an opportunity to provide tools and services that are common across these projects.

Some thoughts/ideas:

• Projects that satisfy prevailing wage and apprenticeship requirements can receive 5 times the base tax credits from the IRA. I wonder how projects currently track their eligibility and if there is a way to simplify the tracking or make it easier to satisfy the criteria (eg. apprenticeship matching service).
• Many tax credits in the IRA are “transferable,” meaning that a project can sell the tax credits to another entity in exchange for cash. There’s a lot of complexity in negotiating these deals and most of the current buyers for these tax credits are big banks or insurance companies. There may be an opportunity to streamline these processes given the sudden increase in transferable credits and increase the number of potential buyers. A startup called Crux was recently founded to tackle this.
• Tracking GHG emissions. The new clean electricity tax credits are only available for projects with less than zero GHG emissions. How do projects track and measure this? Are there 3rd party services that can help a project reduce GHG emissions? Watershed is the most notable company I can think of related to this.
• There are new clean vehicle tax credits but not all buyers and EV’s qualify for this credit. The vehicles must meet certain criteria regarding it’s manufacturing process and individuals must be below certain salary thresholds. I wonder if there is a tool to help people find qualified vehicles and help them easily file the correct forms to receive the credit.
• A tool to quickly access information about these tax credits that are relevant to you, both as an individual or business. Save people time from having to read and filter through tax regulations that don’t impact them. Maybe this could leverage LLM’s? I’m thinking an interface similar to https://www.secinsights.ai/
• How do construction projects source their materials? The IRA adds incentives to use low carbon construction materials. I wonder if there is an opportunity to help developers validate and procure low carbon materials.
• There are a ton of credits for consumers to take on energy efficient home improvements, which will naturally lead to more spending for such products. There are probably existing companies that provide these home improvement products. I wonder what services homeowners will want when buying a home improvement product and what services the home improvement companies might need.
• The IRA allocates 8.45 billion USD in grants towards agricultural practices and enhancements that reduce GHG emissions. How do producers learn how to reduce emissions and get access to these grants?
• What goes into the process of transitioning our energy usage from fossil fuels to clean electric? As more and more clean energy becomes available, there must be opportunities to provide services along the energy consumption stack and capture some value during this massive transition.

Here’s are the resources I found most useful:

• White House’s Guidebook on the IRA
• IRA Summary by the Bipartisan Policy Center
• Climate Tech VC newsletter
• List of greenhouse gases by the US Energy Information Administration
• Our World in Data on the growth of cheap renewables
• Energy and Climate Market Map by Union Square Ventures
• Lessons from the first climate wave by Bessemer

Going through this reading exercise has been a fun 0 to 0.1 quick-start on the climate industry. There are a ton of exciting opportunities to tackle in this space, but the most valuable ones will undoubtably come from talking to customers and discovering hard-earned secrets.

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Here’s some other stuff I spent time on:

Played tennis for the first time in years! I got inspired by watching the US Open Final and so me and my roommates found the nearest court and started practicing. We were terrible in the beginning but eventually we were able to start getting in consistent rallies.

I’ve also been trying to learn more about the content creation space recently. I made my first Tiktok video using Midjourney but the whole process took me several hours. A lot of my time was spent experimenting with Midjourney to get an image that matched what I envisioned. I also wasted a lot of time in the ideation process. I realized it’s really hard to generate good video ideas and ended up discarding a few drafts before posting when I realized the premise just wasn’t good.

Watched Oppenheimer in IMAX 70mm. I loved the storytelling and the screen was way bigger than I expected.

• One of the conflicts that repeated itself throughout the movie was the risk of Oppenheimer’s communist background versus the need to have him lead the Manhattan project. This is a very random connection, but it reminded me of a comment by Eeke de Milliano (Retool’s ex-head of product) on Lenny's podcast where you sometimes have to allow high performers to break processes in order to achieve the results you want. You have to enable these “heroes” to do the things that only they can do. Anecdotally it seems like most ultra-successful projects (eg. a startup, research project, etc) required some level of “heroism” in order to differentiate itself.
• On the flip side, I’m not sure if “hero culture” is long-term sustainable due to it’s high risk. There is no guarantee that the “hero” will actually succeed. Eeke mentions in the podcast that the reason to introduce process is to reduce variance and maintain a floor for everyone’s level of performance. She highlights another risk with “heroes” is that they “break they org” which can cause uncertainty and even resentment from other teammates. Every project probably needs some level of “heroism” to succeed but leaders should be aware of the risks that come with it.

One night I got bored so I downloaded Brawl Stars and played until 3am. I then felt disgusted with myself, deleted the app, and went to sleep. Video game addiction is scary.

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Here's some content I found interesting:

• 2851 Miles by Bill Gurley
  • Gurley’s talk gave me a deeper appreciation for the role of government in capitalism.
  • I had never thought too deeply about government and assumed it was a black box that was separate from the market. However, it’s actually the biggest participant in our capitalist society and also has the power to change the rules of capitalism via regulation.
  • Government policy can create the structures and incentives for which entrepreneurial people will fill into in order to make a profit. Policymakers leverage the profit seeking behavior of the market to create outcomes that they want without needing to go too deep into the weeds of how people actually run businesses and create outcomes for the economy and society.
  • The good part is that government can reduce unethical business practices (insider trading, pollution, etc) but the bad part is that it’s suspect to lobbying and corruption.
• I recently found out about the Unreal Editor for Fortnite which launched in March this year
  • It allows people to create and publish games onto the Fortnite platform
  • Someone recreated the Hunger Games map 🤯
  • There’s a Fortnite version of beer pong called “Slurp Pong”
  • It’s pretty sick how anyone in the community can just make stuff like this