Chris Sacca’s signature cowboy shirts, seen here in Forbes’ 2015 cover shoot, were once a fixture in … [+]
In 2015, venture capitalist Chris Sacca was one of Silicon Valley’s most influential investors, No. 3 on the Midas List with more than one million Twitter followers well before VC memes were the norm, and a regular appearance on ‘Shark Tank’. The Lowercase Capital partner’s early stakes in companies including Instagram, Twitter and Uber minted him a billionaire, putting him on the cover of Forbes.
Two years later, Sacca announced his retirement from startup investing and the show. He dropped off the Midas List. To a new generation of founders, he’s no longer the go-to name for early funding if building the next buzzy social app. In February, however, Sacca officially resurfaced with a new firm name and focus. Called Lowercarbon Capital, the fund, which Sacca is managing with wife Crystal and partner Clay Dumas, is focused on an area that has historically proven kryptonite for VC returns: climate.
For our first-ever Midas Touch newsletter, the weekly guide to the world of venture capital and startup fundraising, Forbes caught up with Sacca to ask about the new project, and subscribers got an early look on Sunday. Sign up here. The full interview — edited only to add full names and account for Sacca’s free use of cowboy-worthy language — runs below.
Midas Touch: It’s been almost four years since the “Hanging up my spurs” post. With the benefit of hindsight, what was the biggest reason for your retiring from startup investing?
Chris Sacca: I just wasn’t feeling it anymore. Back in the early days of Y Combinator and before, there was something so damn refreshing about the wave of companies that were being started as a result of a bunch of roadblocks coming down. These new teams didn’t need big venture rounds anymore. It was all open source, cloud hosted, direct to user launches. Entrepreneurs back then kind of felt like pioneers. But as time went on, and founders became celebs, starting a company became the default plan for too many poseurs.
At the same time, I just found myself unexcited about what was showing up in my inbox. I mean, bless each of these whippersnappers trying to build the next social weed gambling platform, but I just couldn’t get out of bed in the morning stoked to take that stuff on.
Believe me, it was weird. I had a really hard time raising my first fund, because, you know, who the hell was this kid who had never managed any money before. But, I announced that I was tapping out at the time in my career when I was most bankable. Same goes for walking away from ‘Shark Tank’. Who does that? I loved that show and hanging with the other Sharks. Even Mr. Wonderful. But, when those companies came into the Tank, as much as I thought some of them would be winners, I just didn’t feel any fire. If someone goes on ‘The Bachelor’ everyone expects their marriage to last a couple of months. But when I invest in a company, I am making a 10+ year commitment to working with them. You just can’t fake that shit for that long.
MT: At the time, politics – and supporting organizations that could bring about political and electoral change – were what you signaled would be your focus.
The election of 2016 ushered in an unprecedented shit show and pushed America to the brink. Look, we can debate policy all day. Taxes, social safety net, defense, whatever. Reasonable people can disagree on that stuff. But Trump was undermining the institutions of democracy themselves. Corruption, secrecy, lack of accountability, straight up crimes, treason, name it. The craziest part about it? He never once had the support of the majority of Americans. A system that lets a minority of assholes wreck our democracy just isn’t okay.
So, yeah, we set about trying to build tools that would help the world of politics start to reflect the will of the largest number of Americans again. You know, that whole of the people, by the people, for the people thing. From voter registration and securing voting rights, to helping a whole new generation of diverse candidates to run, it became an obsession. The good news? It worked.
MT: Why shift focus to climate? What made you both confident that the best way to contribute in this area was through startup investment?
CS: The reality is, I hate politics. In the past, I would help on the Obama campaigns and then, after he won, walk away for a few years. The political process is so damn indirect. Let’s try to convince a bunch of people to hopefully show up and choose someone that, fingers crossed, we can trust to advocate for stuff that helps those who need it most in a gridlocked Congress that hasn’t accomplished much since Republicans decided to exploit its arcane rules to pretty much block everything they can. For a startup person, all those layers are maddening. We are used to seeing a problem, building something we think helps, and then giving it directly to users and buyers.
In the background of all this, the climate crisis has been more obvious every single day. It used to be a little abstract. But now climate-driven storms, droughts, floods, famine, fires, mass migration, wars, are all happening in real-time. It’s not a theoretical idea anymore. We are at DEFCON: SUPERF***ED.
While it’s good to see more politicians talking about it, the reality is that even the most aggressive ideas on the table aren’t nearly enough to tackle the problem. We can’t reduce emissions by just a few percentage points here and there. We need to wipe them out wholesale. Frankly, we just don’t have the political will to do that. Counting on our leaders to really make the scale of changes we need is an exercise in futility. As long as half of our government officials have to answer to their petrochemical pimp, nothing is going to happen.
All that said, it’s becoming clearer than ever that powering our economy by digging up and burning old dinosaur bones is just too damn expensive. It’s straight up cheaper to power shit using the sun. In a lot of places, solar and wind power don’t need a helping hand, they are just legit cheaper than coal, oil, and gas. Products that use up a ton of water to make are increasingly costing too much. Land ain’t cheap, and so trying to sell goods that require a ton of land means passing on higher prices to consumers.
Hats off to everyone who has been paying a little more to buy “green” stuff. Those folks have proven there is a market. But the reality is, we need seven billion more of those consumers and a shit ton of businesses that think like them too. We can’t count on everyone on the planet to be a treehugger. So, what gets them to be clean and green? Making stuff that is better, cheaper, faster, and just cooler.
The first Tesla buyers? Mostly well-off hippies who cared about the planet. Today’s EV buyers? People who want a cheaper way to commute, don’t want to constantly be going in for repairs, and who just like owning one of the world’s fastest street legal cars for a fraction of what a little dick energy Maserati costs.
We have a plant-based restaurant chain called Veggie Grill. But you won’t find the word “vegan” anywhere in the place. Sure some hardcore animal-free people eat there, and we are glad they do. But do you know why most people go to VG and why it’s got the most diverse customer base of any restaurant chain in the country? Because it’s f***ing delicious.
So, and this is what it all boils down to: We think that markets might actually hold the key to unf***ing the planet. A host of kickass companies will offer up shit that’s just plain better, and people and companies will buy it without ever stopping to think about carbon footprints or which climate academy RCP model version of projected future warming scenarios seems most likely. Along the way, insurance companies, industrial giants, real estate developers, farmers, and even militaries are starting to see the direct trillions of dollars of self-interest they have in sucking some carbon out of the atmosphere. Not sure if you have checked the pricing recently, but it turns out that hurricanes, and wars, and even pandemics are a little spendy.
Chris Sacca is on a self-proclaimed first name basis with President Joe Biden and Vice President … [+]
MT: Cleantech investing got a really bad rap in the 2000s. Do you think the scar tissue the VC community developed after some flameouts was deserved? What’s changed?
CS: I am super grateful to the gals and guys who put real money and sweat to work in the first wave of climate investing. I admire the risks they took. And you know what? If you look at the numbers today, their early portfolios have actually performed well. It just took more than ten years.
The issue was that it was just too damn expensive to start stuff back when they were investing. CapEx and OpEx were bonk. And so much of the stuff they wanted to build required handouts from lawmakers because the pricing just didn’t make sense. The firms that were pushing cleantech were staffing up with lobbyists to try to schmooze folks in Congress to get the subsidies they needed to have a snowball’s chance on a superhot planet.
But so much is different now. Huge, shared computing clusters have allowed nuclear fusion to be an impending reality. Bio and agricultural advancements are coming out of shared lab space that startups could’ve never afforded. Manufacturing is orders of magnitude easier and cheaper. Electrochemistry and stuff like CRISPR have all come so far that today’s founders can piggyback off of the hard work of those who took stabs at this shit before. Add to this that we now have a generation of hardcore scientists who went to school knowing that they wanted to start a climate tech company. Those folks used to dig into this super geeky biophysics hoping one day they would be a tenured professor with some steady health insurance.
Now we have this wave of punishingly brilliant minds who have benefitted from the demystification of the startup journey, thanks to programs like Y Combinator, who grab their degrees and raise a seed round to make their thesis a reality. We also have a couple of stealth companies where the founders are big name traditional tech entrepreneurs who have had legit exits and are now turning their talents toward saving the planet. I’m just blown away by the brains and the chops of the teams taking on the biggest challenge facing all living things on planet Earth. Can you tell I get excited about this shit?
MT: How many investments have you made so far? Are these startups clustered in any geographies more than others?
As of today, we have invested in 40 companies. As of tomorrow, assuming we wrap this interview up in time to power through all of the DocuSigns, that number will be 41. Geographically, this stuff is everywhere. Europe seems to have had a head start. Turns out graduating without a small country’s GDP worth of student loans on your back makes it easier to focus on building some cool shit. And huge European companies have tended to make it a bigger priority to buy cleaner products and services, so the markets there have evolved much faster. But we have teams in Fort Worth, Boulder, Gothenburg, London, Maine, Australia, Fresno, Singapore, Berlin, Squamish, Houston, Detroit, and probably a bunch of other places I can’t roll off the top of my head. Get your hands on some Zillow stock because it has never been clearer that being in the traditional startup cities just doesn’t matter like it used to.
MT: Are you more or less hopeful about climate issues than four years ago? We have a new administration, but less time, for starters…
CS: I am a deep believer in Joe [Biden] and Kamala [Harris]. Can I call them Joe and Kamala? They absolutely get this. I was lucky enough to speak with the President about climate just a few weeks ago. He gets it. He understands deeply that green jobs are blue collar jobs. Are you old enough to remember those “Like A Rock” Chevy truck ads that would play during football games? A bunch of slow-mo mud flying, pipes, sparks, loyal dogs, hardhats, sweat, flags, and hard-earned beers after a union shift. That is literally what it looks like when a windmill is being installed, or a pipeline is being retrofitted to sequester carbon. The same exact guys in Oklahoma are putting carbon back underground, essentially running the wells in reverse. The Scranton, P.A. working class jobs President gets this and he understands that a green economy isn’t a compromise, it isn’t charity. It’s the way that America rebuilds its prosperity.
But, look, their hands are tied. I mean, we love Secretary [John] Kerry, Gina McCarthy, Secretary-Mayor Pete [Buttigieg], Rep. Deb Haaland who is on her way to heading up Interior, and so many other sharp, driven, caring folks who are answering the call to serve. To reclaim a phrase, Biden is truly hiring only the best people. Look at the climate hires like Jen Wilcox, Ali Zaidi, Jigar Shah, and Jane Flegal. They mean business. But, despite all of their hustle and innovation and work to push our government forward and reassert our nation’s leadership position on the world stage, there is only so much they can do.
First, because Mitch [McConnell] is insistent on theatrical readings of relief bills and essential investigations into the gender of toy potatoes, and as long Joe Manchin seems content to shore up the Jim Crow era racist filibuster so that tee time feathers aren’t ruffled, Congress just won’t be able to act seriously to address the climate emergency. Second, the problem is actually bigger than any of the most alarmist scientists ever imagined years ago. Ice is melting faster than predicted. Permafrost is releasing more methane, which is 25 to 84 times worse a greenhouse gas than carbon, than models predicted. Weather is warping more than the computer predictions guessed it would. It’s bad. I mean, as The Dude would say, “New shit has come to light, man.”
But like I said earlier, for the first time ever, we have companies that have the potential to have gigaton scale carbon reduction and removal impact on the planet. A gigaton is a billion tons. I sometimes have to remind myself of that. And how? Just by doing what they do well and offering people and businesses better, cheaper options. Hell yeah that makes me hopeful. Can you imagine me excited to check my inbox? Of course, when your name shows up there I’m not. But other than that, the size of the problems these startups are tackling, the talent and passion of the founders, their success in recruiting other amazing people to join them in their missions, and the embrace of the financial world that this is the most valuable path forward? Yeah, this shit all makes me super hopeful.
Chris Sacca (left) with Shark Tank’s Mark Cuban (second from left), Daymond John (third from right) … [+]
MT: Looking back at the investments that made your VC career – including Twitter and Uber – how has the game changed? If you were starting out in your career again today, would you have raised a rolling fund? Gone deep into crypto? What would’ve appealed the most to a young Sacca? (If you say climate, not sure I will believe you…)
CS: The crypto stuff is interesting, even beyond money laundering. Just seeing which of my friends I can piss off by saying that. In terms of spaces I would focus on? When it comes to investing, my rule has always been to only invest in things where I think I can personally help the outcome. If a founder brings me a promising cure for cancer, I sincerely hope they make it work, but I am useless to them. So, the original focus of my career was on companies where I could walk into HQ and do my part to help move the needle. You might remember, I wasn’t actually rich enough to be an angel investor. When I wrote a check to a company, I was legit sweating that money. So, even though it annoyed the shit out of Jack [Dorsey], I showed up to the Twitter offices and did whatever I could to help that cool product become a real business, including leading the first real revenue deals with the search engines. Same kind of stuff for Uber, Twilio, whatever. Those were in my wheelhouse.
When I was at Google, I actually did a ton of work on clean energy. Larry [Page] and Sergey [Brin] were obsessed with it. Partly because they cared about the planet and felt a responsibility to not f*** it up, and partly because we were the biggest consumer of electricity is something like three states. Don’t sue me for saying that, Sundar. I love you. They knew the cost curve on clean power would eventually come down and they also knew they could help accelerate that.
I remember sitting down with now climate VC then clean energy entrepreneur Andrew Beebe like 15 years ago and seeing what we could do together to make solar cheaper industry-wide. I was out meeting with dairy farmers and city council members working with manure harvesting troughs that burned off methane to produce power. I spent a lot of time in the north of The Netherlands pulling together wind power deals, and once worked a five way deal to get some clean power to a facility in The Dalles, Oregon by winning over a cherry-farming local judge who looked exactly like Wilford Brimley but never once mentioned “dye-a-bedis”.
So, I don’t know, I could’ve ended up in the field. But, the reality was the founders weren’t there yet and the economics couldn’t support it. I can’t overstate the impact Paul [Graham] and Jessica [Livingston] at YC had on changing the startup world for consumer web and apps. That’s where the opportunities were and it luckily happened to match up with what I was good at.
MT: Would you have invested any differently in startups based on impact, knowing what you do now? For example, one factor with cryptocurrency might be its mining’s use of electricity at scale. We could probably debate Twitter’s positive and negative influences on society, or any social media platform, for hours.
CS: Working with companies is f***ing emotional. I mean, most of them don’t work out in the end. There’s so much failure. Even those that do, have their endless crises and fires to put out. It’s always cool to see founders make your Forbes lists and end up on your covers, but no one ever gets there without some f***ing scar tissue. So, the main thing I have learned is to ask right up front, “Will all of those ups and downs, all of this time, all of this anxiety, all of the inevitable burned bridges, and conflict, and other shit, etc., will all of that be worth it in the end because you will be proud of the impact this company had on the world? Will you feel good when you’re working from home and your kids wander into your office curious about what you do for a living and, when they figure out, they are eager to help out?” No shame on anyone trying to build a new marketplace to embed SaaS platform RFPs into TPS reports. But, man, I just don’t have ten years’ worth of heart to pour into that shit anymore.
MT: With so much excitement around crypto, NFTs, health tech, fintech, you name it – do you really think top-tier talent is going into this space fast enough? If not, what will it take?
CS: Cheers to whoever paid $3 million and change to own the rights to a forthcoming remix of an EDM track from 2018. And that Top Shot stuff is cool. I get it. I mean, I was this year’s old when I finally got my hands on the coveted Billy Ripken F*** Face baseball card that I chased for much of my youth. Collections as a reflection of your identity are powerful. And I will never underestimate the beauty of tools that empower creatives to do and get paid for their best shit.
But, end of the day, though Clubhouse seshing might give you a different impression, billions of dollars are flowing into the climate tech space because the total addressable markets are f***ing massive. Give me a minute to do a little math. Oh yeah, by my calculations it looks like human beings in the future are going to eat a lot, use a bunch of electricity, build some houses and buildings, and you know, go some places. A few of our companies, if they work out and win just a few percentage points of market share, will default to trillion dollar valuations.
Look no further than what the big investment banks are doing. The same guys who have been leveling forests in Borneo and uprooting indigenous tribes to fund palm oil deals are now writing big checks into climate deals. Are they doing that because of the warm and fuzzies it gives them? No, they are doing it because they know that’s where the money is. Plain and simple, their spreadsheets show that drilling and mining are liabilities. Meantime, the biggest wave of wealth creation since the Internet is being seeded right f***ing now. Bonus that those suits don’t have to explain to their kids that they can afford private school because daddy’s coal mine poisoned 150,000 people’s drinking water. Sweet dreams, honey!
MT: What’s the top piece of advice you both would give aspiring entrepreneurs interested in climate/clean tech? Do they need to be scientists? Practitioners? What about for the rest of us, whether it’s supporting them, buying from them, or investing in them?
CS: Climate isn’t just some niche. This shit touches every single aspect of our lives. What we eat and drink, where and how we live, how we get around, the shit we use, how our lives are powered, name it. It’s everything. Yes, scientists and engineers are an indispensable part of the equation and fingers crossed this administration makes it easier for the best and the brightest to keep bringing their talents to the U.S. and that they start their companies here. But, just like not everyone who works at a tech company is a coder, not everyone who works at a climate tech company has a lab coat on. These companies need sales, marketing, customer service, finance, legal, HR, comms, as well as mechanics, drillers, farmhands, fishermen and women, and so on. In fact, people with those skills will be even more helpful because these companies are starting small and often don’t have experience in those areas.
So, yeah, want to be helpful? Check out the jobs pages at these companies. It may be unlike work you are doing now but you’ll feel so much prouder to roll up your sleeves every day. If you’re an investor, as long as you don’t have some kind of allergy to making money, get out your checkbook. If you are a consumer, hell yeah you should buy clean shit. Do so because these products are just plain better, cheaper, faster, cooler, and yeah, maybe get involved in this space if you, I don’t know, care about saving a few billion lives, give or take.
I’m a senior editor at Forbes covering venture capital, cloud and enterprise software out of New York. I edit the Midas List, Midas List Europe, Cloud 100 list and 30