Tom Steyer, longtime Democratic fundraiser, has now set his sights on investing in companies with climate impact.
Category
🤖
TechTranscript
00:00So let me take one step back. I'll address the overall business agenda, but first let me address Silicon Valley.
00:05Mm-hmm. I mean I do live in San Francisco and I've lived in California for
00:0940 years or more and
00:11people love to write about people in Silicon Valley who are actually Republicans and support Mr. Trump.
00:18It's sort of a man bites dog story. And Grayson Horowitz came out too. Right.
00:23And so but to a very large extent the Valley remains what I would consider it moderate Democrat.
00:28Yeah, very business-oriented, very data-driven, very liberal socially and
00:35overwhelmingly in my mind still supportive of
00:38Kamala Harris for the next president.
00:42Welcome to Leadership Next, the podcast about the changing rules of business leadership. I'm Diane Brady.
00:49Hi everyone. Thanks for joining us. I'm here with Tom Steyer. Tom, thank you for being here.
00:54Diane, it's great to be here with you. You built this massive hedge fund. Would it go from 6 million to more than 20 billion
01:00I think in 25 years. So kudos to you for that.
01:04Talk a little bit about the role of government because let's I don't want you know
01:08I know that you ran obviously to be the Democratic candidate in the last election.
01:13The Inflation Reduction Act, the CHIPS Act, clearly those have been factors potentially as catalysts toward the green economy.
01:21How important is it that
01:24we get a certain regime in because business is moving in this direction anyway?
01:28I mean, I wrote a book basically making the point that this is an economic opportunity and the only way it's going to happen
01:35is by winning in the marketplace.
01:37So I'm an absolute believer in business, an absolute believer in capitalism.
01:41But having said that, this has to be a public-private partnership.
01:46So if we can take a step back and talk about why we're talking about this at all,
01:50why are we going, do we need to talk about an energy transition?
01:53Why is this not just something that happens in the world of commerce without any conversation or
01:59politicization? Very simply, the world has run on fossil fuels for a long time and the
02:05use of fossil fuels is very highly correlated with an increase in incomes for the people in those countries.
02:11So you can go back and see that we've gotten a lot richer as a
02:15people, not just in the United States, but around the world as we've used fossil fuels.
02:18There was no intention to emit CO2. There was no intention to create global warming. There was no intention to have
02:26vast unintended consequences.
02:29But we did.
02:31So the real issue here is we have a huge industry
02:36polluting in a very destructive way, which they never intended to do, but which they're not paying for.
02:41And they love it. And who wouldn't? So it's like, of course they do.
02:46But the issue is, when we talk about government, okay, what is the IRA?
02:51It was basically subsidies for clean industries. So instead of taxing polluters,
02:56they're paying people to produce things that don't pollute.
02:59It's kind of a tax on its head, a subsidy for non-polluters.
03:04Because the straight marketplace won't work. One quote I like from your book, that you're skeptical of any solution that requires
03:10humanity's collective heart to grow three sizes. Nice allusion to the Grinch there.
03:15But talk about our instinct to do the right thing. Is it just inertia?
03:21I mean... Well, let me say this.
03:24And I'll give you an example, because this actually is happening. The statistic
03:27I think I like to use the most is this one. In last year, 2023, of
03:32new electricity generation globally, 86% of it was renewable.
03:3814% of it was fossil fuels.
03:40So the business case is compelling.
03:42And the reason people did that, no one did that to be nice.
03:45There was no person who said, I'm willing to pay higher for clean energy.
03:50It turns out that solar and wind are much, much, much cheaper than natural gas.
03:55And that is a disparity that is only going to widen.
03:59If you look at the cost, you know, as we all know, there is a $14,000
04:04Chinese plug-in hybrid that will go 1,200 miles.
04:07From BYD?
04:08From BYD. My point being, look, technology beats dead dinosaurs.
04:14And that is a spread.
04:15Batteries got 80% cheaper in the last decade.
04:18They'll get 80% cheaper again this decade.
04:21Solar costs are down to a penny per kilowatt hour.
04:25Are they going to go lower? Yes.
04:27So that's the power of innovation.
04:29And that's the power of business and commerce and, you know, intentionality.
04:34Yes, that's going to.
04:35But there's a lot more to it than that.
04:37And the question is, how fast do we deploy the existing technologies?
04:42How fast do we create and deploy the new technologies
04:45and the problems that haven't been solved?
04:47Can I go back a second to when you were building your business?
04:50Because you started on Wall Street.
04:52Oh, I have a totally traditional financial background.
04:54Well, and, you know, it served you well, let's put it that way.
04:58But would you have been able to make money through the 90s,
05:01through the early aughts in any kind of climate investment?
05:06Or is it really that this moment in time?
05:08Because Galvin and I started in 2021.
05:10When Jimmy Carter was putting solar panels
05:14on the roof of the White House in the 1970s,
05:17that energy was far more expensive.
05:20Sure.
05:20Than fossil fuel energy.
05:22He was and he was doing it for a different reason.
05:23He was doing it because of the oil embargo. Yeah.
05:26Nowadays, it's much cheaper.
05:28I mean, what's happened is the costs have crossed.
05:32In new technologies, there's a thing called the S-curve.
05:36So it's like you go along trying to get better than the existing technology.
05:40And when the cost curves and the efficiency cross,
05:43so now the new technology is better, it goes up like almost in a straight line
05:47and it levels out about 80 percent.
05:49And that's going back to, you know, replacing whale oil in the 1840s.
05:53I want to pause because you are in San Francisco, you know,
05:57so not necessarily of Silicon Valley, but around there.
06:00And Silicon Valley has had
06:03been lukewarm at best to the Democrats.
06:06Not because of the climate issues, but more because of antitrust
06:10and other regulatory issues.
06:13I know you're not in the government, so I don't want to make you
06:16a spokesperson for government.
06:17But how do you think about the overall business agenda?
06:21So let me take one step back.
06:23I'll address the overall business agenda.
06:24But first, let me address Silicon Valley.
06:26I mean, I do live in San Francisco and I've lived in California for
06:3040 years or more.
06:31And people love to write about people in Silicon Valley
06:35who are actually Republicans and support Mr.
06:38Trump. It's sort of a man bites dog story.
06:42And Jason Horowitz came out, too.
06:44Right. And so but to a very large extent, the Valley remains
06:48what I would consider it moderate Democrat.
06:50Yeah. Very business oriented, very data driven, very liberal socially
06:55and overwhelmingly, in my mind, still supportive
06:58of Kamala Harris for the next president.
07:01There are a group of people, many of whom have actually left
07:05Silicon Valley and now live in Austin or Miami,
07:08who are who don't like the way California is run, who don't like high taxes
07:12and who are, as you said, worried about antitrust.
07:15Having said that, when I look back at what is.
07:19You know, creates business success in my mind,
07:24the times when America was growing the fastest, we had very, very high
07:26marginal tax rates, very high, much higher than today, maybe double today
07:32during Eisenhower, during Kennedy, during LBJ.
07:36We had really high marginal tax rates in this country.
07:39We didn't have the disparity in income.
07:42If you look at the simple, how much does the CEO of a company make
07:47compared to how much does the lowest worker in that company make?
07:49Three or four hundred times.
07:51It was a fraction of that.
07:53It was a much more equal society in multiple ways.
07:58So I'm confident that this idea of low taxes, low government,
08:03everybody get out of the way.
08:05I mean, it just doesn't work.
08:07That is not the means for a successful society.
08:10If you look state by state, how people have done.
08:15Look, I mean, people are very mad at California who don't live in California,
08:19but California has a really high.
08:20We're the fifth biggest economy in the world.
08:23Yeah, we have incredibly successful businesses.
08:26So to me, this whole idea that cut taxes, cut government, cut taxes,
08:31cut government, cut support, get rid of education, that can't help.
08:35Get rid of, you know, everything.
08:38I don't think that makes any sense.
08:39And so it has never worked.
08:41That's not what the data says.
08:43But if you have an income stream of X dollars
08:45and you can either tax it at 50 percent or 25 percent, people are like,
08:49I much prefer 25. That's much better.
08:51Exactly. Human nature comes into play.
08:54One thing that maybe it's a symptom of the polarized times we're in,
08:58but business leaders are often remarkably silent on political issues.
09:03One, because you get very attacked now.
09:05It's quite transparent.
09:07You know, things go viral.
09:09I was speaking to Steve Ballmer the other day about his USA facts
09:13that he's trying to get out there to correct misinformation.
09:17I'd love to get your thoughts.
09:19Obviously, I know you've been in the political arena,
09:21but what is the role of business leaders in speaking up about these topics,
09:26climate change or otherwise?
09:27Well, let me say what I would like my role to be, OK, and how I perceive as a.
09:33Professional investor and professional business person, how I would like to.
09:38Yeah. And of course, I have my opinions.
09:41Just like the other 330 million Americans. Yeah.
09:45But what I would like to do is have enough granular information
09:48that I can share accurately with elected officials and people in government
09:53so they can make better decisions.
09:55So, you know, I'm obviously focused on the energy transition and on climate.
09:59And I want I know that people in Washington, D.C.
10:02can't go to venture capital meetings on Sand Hill Road.
10:06But I can't.
10:07But are facts what drive decision making in Washington?
10:10Not always. I take your point.
10:12But I want the people who are making decisions to know the facts.
10:16And it's it's they can't get them on their own that they just 24 hours in the day.
10:22They have a full time job. They can't do it.
10:25I view what I would like to do is to be able to say this is what we're seeing.
10:29These are the actual numbers you should know.
10:32This is what solar costs. This is where it's going.
10:34These are where batteries are going.
10:36You're looking at this technology for direct air capture.
10:40This is what we see in terms of the cost per ton of sequestration.
10:43This is what we see in terms of scalability.
10:46You can believe us or not. You can get your own experts.
10:48But we've looked at this seriously.
10:50We're putting you know, we're investing basis on our research.
10:53That's what we see. You should take it.
10:55You know, it's interesting.
10:56We always talk about what the private sector can bring to the public sector.
10:59You know, efficiency, facts, getting things done.
11:02We rarely talk about what the public sector can bring to the private sector
11:07in terms of how you get things done.
11:10I'm curious, even your time on the campaign trail.
11:13Were there any lessons gleaned from that
11:15that you've taken into the world of business?
11:19Well, let me say this.
11:20And you can see this very granularly this year.
11:24The people who are running corporations, particularly public corporations,
11:29believe that their career success, their jobs, their pay
11:34and their integrity, very importantly,
11:37is based on increasing earnings for their shareholders.
11:39And so any time they're telling you that there's something more important to them
11:44than increasing earnings for their shareholders, I would check my,
11:48you know, watch to see if they lifted it.
11:50They have a job to do with an integrity and responsibility to take seriously.
11:55Those are not people who should be setting the agenda for this country.
11:58They should be setting the facts.
12:00They should be implementing.
12:01They should be working within the framework that elected officials
12:07who are the embodiment of the people set.
12:10And so, look, elected officials have a different responsibility.
12:15Their job, their integrity, their success,
12:20their reputation involves getting reelected or elected in the first place,
12:24which means satisfying people that they're representing in a significant way.
12:30That's their job.
12:31And so I don't, I try not to mix up those two different things.
12:36And I think that anytime you see
12:40someone in one of those spheres talking about how they're really concerned
12:42about the other sphere,
12:45you have to wonder if it's true.
12:45Decision making is different, too.
12:47Yes. So different.
12:48And so I view it as it's got to be the way the United States
12:52has traditionally worked is we're a democratic society.
12:55The will of the people rules.
12:57They set the rules. They should set the rules.
13:00That's our morality, integrity.
13:02And within that box, business people work.
13:04So you call yourself an optimist.
13:06Let's let's drill down on that a little bit.
13:08Let's talk about the optimistic investor.
13:10Where are you putting where your biggest bets right now?
13:14My old friend and partner, Katie and I, Katie Hall and I started
13:18a multi-strategy investment firm
13:21to invest into the energy transition in multiple strategies.
13:26So that includes venture and growth
13:29and includes real estate, buying buildings and turning them to net zero.
13:34But, you know, it involves public stocks.
13:36But we have plans to do many strategies because we believe this transition,
13:41as I said, inevitably has to happen, is happening very fast.
13:46That it's a huge tailwind to investing so that there is a strong
13:49commercial argument that this is a place where people,
13:53professional investors with great experience, can marry that
13:57to domain expertise, specific knowledge of these markets
14:01and get very good returns and also have great impact.
14:03As a citizen, I suppose, are you worried about the state of democracy right now?
14:09We obviously, from my standpoint.
14:12We have someone who has a real chance to be president.
14:16Who has said, who tried to overturn the last election.
14:20You paid $10 million, I think, to try and win the impeachment battle.
14:25I remember that.
14:27Who I think is, you know, who has been convicted of 34 felonies,
14:31who has made multiple statements about what he would do
14:35in terms of the law and in terms of future elections.
14:39If he's elected, it's a little hard to read between all the very confusing
14:43statements, but clearly somebody who, you know, is not someone who loves elections,
14:48not someone who loves democracy and not someone who respects it.
14:52So am I worried about that?
14:53I think that that would be, you know, a big threat to democracy.
14:58Do I believe that the American people will get back their democracy
15:02if we ever lose it? Yes.
15:03I believe it's built into us in a very deep way.
15:06It is built into me in a very deep way.
15:08And I'd be willing to go a very far piece to try and make sure we secure it.
15:12But is there someone running for president who has said things
15:15that are profoundly undemocratic and has made threats to our democracy
15:20repeatedly and said, you know, talked about things he was going to
15:23and then has lived up to it in the past?
15:25I think we all know that's true.
15:27So that's scary.
15:29Is there anything else on your radar right now you want to put on ours?
15:33I would say this.
15:35I do think the technology is better than people understand in terms of climate.
15:40Our ability to solve these problems is much better than people understand.
15:45It's also true that the news from the natural world,
15:48which I follow obsessively, is worse than people understand.
15:52And in some cases, far worse and far scarier than people understand.
15:56Adaptability is as much as fighting climate change.
15:59So I know this is a real race between what's going on,
16:03the deterioration of the natural world that we all rely on
16:07and the incredible progress in the technological world.
16:09But if we win that race and you step back and think about where we're going to be
16:14as human beings, as Americans,
16:18we will be able to create a much better world
16:22than we've ever imagined.
16:24You know, in terms of health, in terms of education, in terms of equality,
16:29in terms of all the important parts about life,
16:33you're going to have an ability, given the other
16:36advances that we're making, which are incredible,
16:40to really provide a way of living for the people in America
16:45and including people all over the world that is really almost better
16:48than we can imagine.
16:49And that's why I'm so focused on trying to make sure
16:52that we have a sustainable natural world, because we do depend on it.
16:56And if we don't, then we're not going to have time to focus on this
17:01because we're going to live in a chaotic, dangerous, unhealthy and scary world.
17:05Living to 100 doesn't make much difference if you can't go outside.
17:09And I'll give you one one small example.
17:13I mean, one of the things that the UN projects.
17:18Is that on the course we are going, we will have 20 to 25
17:21million climate refugees per year.
17:26Syria had five million refugees partly related to climate
17:30and that completely roiled Europe as they moved into different countries
17:35in Europe, 20 to 25 million refugees a year every year.
17:40That is something that is a profound threat to the security
17:43of our political systems around the world.
17:46So let's drill down a little on the actual technologies
17:50that you're investing in that you think are exciting right now.
17:53So let me say this.
17:54We are deploying a lot of existing technologies like wind and solar
17:58and EVs and batteries that everybody knows about that are getting much better.
18:03But we all know that.
18:04What people don't know is that there are literally hundreds of new technologies
18:09being developed, not only to see if they work,
18:12but to see if they work at a price that works for customers.
18:17And, you know, that is a real difference.
18:19So, for instance, one of the things that I find fascinating is for a long time,
18:23we've had what's called geothermal energy.
18:25That's basically hot water under the earth.
18:28So if you think about Old Faithful and Yellowstone, the water comes up.
18:31It's hot. It's energy.
18:33You can use it, you know, just the way you can use natural gas or wind or solar.
18:37What's changed is people are now using basically
18:42techniques from oil and gas to go down 5,000 feet, not 500 feet, but 5,000 feet.
18:47And they are able to get completely clean baseload energy.
18:52So there's no question about when the wind doesn't blow or the sun doesn't shine.
18:56It's always there.
18:58Baseload energy that is completely clean
19:01amidst no CO2.
19:04And which is commercial, so it can be done at a price that competes.
19:09Now, there's a real question about how big this can be.
19:12But this is one of 100 technologies where you go like, oh, God.
19:15Breaking down plastics.
19:16I've seen a lot of those as well.
19:18There is there.
19:19I've seen techniques on plastics that are amazing.
19:23We know there's plastic pollution.
19:24We recycle only 6% of plastics.
19:27Only 6%, 94% does not get recycled.
19:32So the question is going to be,
19:33how are we first of all going to pick it out, sort it and reuse it?
19:38There are amazing technologies going on in that involving all kinds of different,
19:44you know, skills and really incredible new machines.
19:48So as we see this, it's exciting to know that there's a machine
19:53that can look at this and pick out 10,000 different items.
19:57It's incredible. Humans can't do that.
19:59That's incredible.
20:00So let me clarify, you invest in so you're not investing seed capital.
20:04First of all, you're you're investing in these companies.
20:06Are you helping them to replicate at scale?
20:08Is that part of what we're doing? Multi strategy, right?
20:11So we do do seed.
20:13We do do venture and growth.
20:15We do do real estate.
20:17I mean, what we're trying to do is figure out strategies
20:21where basically we can be really profitable in decarbonization.
20:26We're not concessionary.
20:27We never we're not asking people not to get good returns.
20:30We're not at all concessionary.
20:31In fact, we believe this transition is a tailwind that has to happen.
20:36It doesn't mean every company will succeed.
20:37You still have to be a professional investor.
20:39You have to have domain expertise in this area.
20:43You have to marry the two. And that's the strategy.
20:45And doing good doesn't mean you can't make a good return.
20:47If you're not getting a good return, you're not going to get a chance to do good.
20:51Great. Thanks for joining us, Tom.
20:52Diane, thank you so much for having me.
20:57Thank you for having me.