Hello and welcome to the LA venture podcast. This is Minnie Ingersoll host of the podcast and partner at TenOneTen. TenOneTen is a seed stage fund here in LA. All opinions expressed on this show by me and my guests are solely our own.
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I am thrilled to have Aaron Fyke on the podcast today. Aaron is the founder and managing partner of Thin Line Capital, a seed fund focused on energy and sustainability. Prior to starting Thin Line, Aaron was the founder of six companies in the areas of fuel cell, ocean power, concentrating solar and energy storage.
I am pretty sure that Aaron is going to convince me to become a clean tech investor. Aaron, thanks for coming on the show. Great. yeah. Why don't we just start with the premise of Thin Line and why you can be a seed stage investor and still move the needle here.
No, that's exactly it. So people remember. most people, some people remember that 10 years ago, there was a lot of excitement about what was called clean tech and then fundamentally a lot of disappointment. I mean, Tesla was a big success, but a lot of the companies required an enormous amount of capital, you know, to build out a big.
Solar tower in the desert or some, or some biofuels plant, or, you know, he's a very capital intensive investments and they took a long time to exit. And so then everything kind of fell apart in 2009 with the global financial crisis. And that was around the time, by the way that I started connecting with idea lab and decided to start multiple country companies in that environment.
but what I noticed. , the reason those investments from 10 years ago were so difficult. Is that everyone is trying to build out these markets, you know, either they're trying to build out the solar market or build out the battery storage market or electric vehicles.
, you know, they couldn't be a piece of the supply chain. and, and with traditional venture capital investing, this is a good thing, right? I mean like Google basically built out internet search.
They didn't. Sell into the internet search market and Facebook didn't sell into the social media Mark. Okay. So VC investors were lured into the illusion that starting a whole new industry is just what's done. And yet in the energy space and the industrial space. You know, you don't do that.
You don't try to build out whole new industries using venture capital dollars and they didn't. And what happened is wind took off. Solar took off, but they all took off with. Corporate balance sheets with debt financing, you know, any other vehicle than venture capital dollars, as, as it should have.
And so what I notice now, when I was wanting to get Finland going, is that the solar industry, the electric vehicle industry, the grid scale battery storage industry, wind, you know, all of these things were big enough industries on their own that now a bunch of, traditional venture capital. Type companies, could now sell into those markets.
It's very different selling into a massive market than it is to try to build it out from scratch. And so all of these new companies were far less capital intensive. And so you know, there was a.com crash and then a recovery, there was a clean tech crash. It was too early, by the way, I'd ever get the.com crash happened because it was too early.
There weren't actually that many people on the internet, whereas in web 2.0 is when that surge happened. now these markets were mature enough to accept. Startup selling into them. And that's the thin line says to invest in these low CapEx companies that are hitting their wagon to the growth of solar or wind or storage, or these others in industries,
So tell me more about the, the status of. Today or just the state of the industry.
Yeah. Well, so to give you an example, I mean, 10 years ago, globally, there were seven gigawatts of solar installed and now there's well over 500. So, uh, and then when does the same things over 500. So there's a terroir, there's a trillion Watts of, uh, of capacity installed in renewables and it's, it's an exponential growth curve.
Renewables are now flat out cheaper than traditional, fossil generation. The coal industry is in sharp decline because. It doesn't really make sense to build an OCO plan. , you can buy a wind farm or a solar field for far cheaper.
And the same thing is true of electric vehicles.
The expectation is that electric vehicles will reach cost parody with, internal combustion engines literally in the next three years.
Let me just stay with that, those industry stats, because I think some of that is really striking it's cheaper for, I think you said like a utility, would it be a utility as the customer here who's buying and it, and so it's cheaper for them to go to a wind farm than a coal plant right now.
Yes. well, so there's a little bit of industry dynamics. Typically what happens is, There are independent power producers, which actually own the plant. And then they sell the electricity to the utility. And in many regions that utilities are forbidden from actually owning the plants themselves.
Uh, just some monopoly regulatory law, but the people who ultimately develop these projects, you're going to build a new installation. Yeah. It's far cheaper to go after solar or wind than to build a coal plant.
Did they totally disrupt things though? Because the people with the expertise building coal plants are different than the people with expertise, building solar power.
Well, so let me say one thing before someone says, well, that's not quite a fair comparison, and that is, coal plants have, what is called firmed power. Which is that they produce 24, seven at a constant rate. And people think that it's called baseload power and people think, well, you need base load power.
and renewables can't provide them. That's the biggest criticism of renewables while the sun is not shining or the wind is not blowing. You won't have renewables. a couple of things have happened regarding that the first off. Is that you don't actually want baseload power. You want power that ramps up and down to match demand.
And it's an illusion to say you want baseload power. In fact, what I find really hilarious is is people criticize renewable thing. Well, in order to work, they're going to need, we're going to need to build up all this storage. And no one thinks for the fact that so one of the biggest storage installations in California is, is the Helms pumped hydro facility North of Bakersfield.
It's 1.2 gigawatts. It was built in the 1960s. It was built because Diablo Canyon nuclear facility was being built in order to subsidize nuclear power. We needed storage. Why is that? Cause he can't shut a new client off. And so they have negative electricity prices in Texas right now because they have so much wind and the nuclear reactors at night, can't shut off.
And so therefore it's driving the electricity price to negative. So point out that renewables do need storage, but by the way, so did coal and, nuclear for the opposite. Reason and storage is getting far cheaper now than it was. so that's the first piece.
So before someone says, yeah, but solar, what do you do at night? And the answer is you store it, but now to your point, um, yeah, general electric flat out said GE is by the way, a massive provider of steam turbines for the coal industry. GE has announced that we are out of the coal plant. coal usage, the client, something like 60% in the U S you know, in the last 10 years, it's just, yeah, we're not building new facilities. We're not building new coal plants anymore.
When I took my professional engineering exam, and it was pages and pages of designing. Like every, I turned the page and like, Oh my God, I got to design another coal plant and find the turbine efficiencies and boiler rates. I probably will never, I will never use that information.
The fact that I know about steam quality of coal plants, But that's okay. I don't think there's a massive labor disruption. I think that people see the huge opportunities and not, not just from the engineering scale of designing this stuff, but like maintenance and, you know, one of the fastest growing positions is wind farm maintenance technician.
You know, somebody wants to climb up the ladder and, go into those things. And that's just going to be the gross jobs of the future.
So, I mean, that almost sounds positive, right? That almost sounds like a good thing. Like you said, Cole, what did you say is declined 60%. And yet we're having all this massive global warming, we're in the middle of some crazy storm right now, , do you want to give me the, the less sunny side of what's going on?
Well, I mean, the store is entirely due to the, you know, global warming is average. Temperatures are increasing, but that is driving. Uh, huge amounts of variance in the weather is what, the way to put it, you know, uh, Amory Lovins co of Rocky mountain Institute, not a better term would be global weirding because areas that are dry, they're going to get drier areas that are wet, are going to get wetter.
We're going to have way stronger, snow storms, way stronger heat waves. We're going to have to learn to live with this quite frankly. Um, you know, I sort of alluded to this a little bit earlier that, uh, not only investing in companies that are going to do well as a world chases, uh, you know, moving to zero carbon, um, electric vehicles, renewables grid, storage grid modernization, but there, the fact is we already have.
I mean, if we want to stay below one and a half degrees, C we're down to seven years of carbon budget left before we blow that, which means we're at 1.4 now, or at least 1.4 is what's locked in. I'm not, I, it maybe be optimistic that we will stay below 1.5, but,
Can you spleen that 1.5 and what happens there and sort of what, what that theory? Yes.
Yeah. So we, Lee R 0.9 degrees Celsius hotter on average, then the longterm, average has been. So you, you take the longterm baseline of what the temperature should be. And our average now is 0.9 degrees hotter, and that's that temperature Delta has caused the increase in wildfires and. California, the flooding in Florida, you know, all this stuff.
That's 0.9. The trouble is if we shut off all emissions today, drafted all to zero, then this stuff we've already admitted, which hasn't yet got to the upper atmosphere, that is going to drive us to 1.4. So we basically have 1.4 locked-in. Like right now, even though the average temperature is actually 0.9.
So if we went to zero tomorrow, we would still drift up to 1.4. So the way you can do is there's these things called carbon budgets. It's basically. Okay. So how much carbon could I to the atmosphere and what would be the resulting temperature from doing so? So if you look at that, we're at 1.4 now effectively, um, This is why this whole 10 years left to get for 1.5, but that was announced three years ago.
So we're at seven years left. It basically says if we continue to burn or release CO2 and other greenhouse gases at the rate, we're releasing them. Then if we keep doing that for them, then 10 years from now, we will cross. We will burn you. We will use up the amount we can use before locking in 1.5 degrees.
and then of course we've continued to do that for three years. So we have seven years left and, uh, so that's what that carbon budget means. It means how much CO2 we're allowed to emit and what will be the resulting temperature change, which comes from that.
don't things start to happen. Once we hit 1.5, like isn't there don't things that the negative cycle starts even more than it already has.
So the big risk are these irreversible feedback loops, so a good example are, are, um, wildfires. We increase the CO2 in the atmosphere. It causes, you know, higher elevated temperature, dries things out. Creates a wildfire. The wildfire burns an entire, the amount of trees with releases and enormous amount of CO2, which then increases the temperature.
So as fires burn, we really see it too, as we lose CO2 fires burn. So that's a feedback loop. Uh, another good one is the Arctic ice melting. The Arctic ice reflects a lot of solar radiation because it's big and white and shiny and large. And as that ice melts that mirror, so to speak. Well, it goes away because it melted and therefore reflecting less heat away from the earth there for the earth is heating up warmer.
So we heat up, we melt the ice, we heat up faster. So there's a number of feedback loops, permafrost melting in the Arctic. So there's a bunch of methane locked in, frozen in the Arctic and as temperatures warm, and by the way, uh, We're at 0.8, but there's a huge spread. That's the average for the earth.
This spread is much, much bigger at the pole. So Alaska is far hotter. Now that it's a trend than, than say the equator is. And so as that heats up, that releases a bunch of methane. Into the atmosphere. Methane is a really powerful greenhouse gas. It's 25 times as powerful as CO2, um, that increases the temperature with it, which then melts more permafrost, which releases more methane.
Okay. So if we trigger these feedback loops, which ultimately release more greenhouse gases, then we as a society do then, then what that means is we're, that's it it's game over because if we could reduce to zero. It doesn't matter anymore because we're now off the cliff and what's driving global warming are these feedback loops.
So the majority of these feedback loops trigger . I mean, there's no line in the sand, but two degrees Celsius is a point at which there's real risks that a bunch of these will be triggered somewhere between one and a half and two degrees Celsius. Uh, we're not triggering these feedback loops as much, but things like the wildfires we see in Australia and California or the flooding, uh, you know, from, from hurricanes, um, I mean that's stuff is very real and that's happening now.
, you know, billions of dollars were lost because of hurricane. I always think like, that's just. Budget the next hurricane, you know? Okay. We're going to lose X number of billions of dollars. Can we just like, pretend we've lost it now and take that money and investing to move away from carbon sources or are we just sit back and blow it all and lost real estate?
Like your choice? So, um, there is no line in the sand for one and a half degrees. It's just that, one and a half is a reasonable target because It's in the near term and anything after one and a half, and two things continues to get worse and worse and worse, But if we go past two, there is a serious risk that it's game over. And so you don't want to set your goal. To be the end of society. Uh, you want to set your goal to be, uh, something that, and by the way, living in a one and 1.7 degree world, uh, still is a pretty horrible place to own real estate or be a farmer.
And so that's why that one and a half line is there, but the real nightmare scenarios are the feedback loops and those don't actually happen at 1.5.
Yeah, although you scared me even before getting to the, two degree, bump you scare me and your innovate, Pasadena talk. Just where we are today is already pretty terrifying.
Yeah, well, people don't realize like California, for example, um, they, you know, in 2017 we had the biggest wildfire. In California's history happened in 2017. And then in 2020, we had multiple fires that were bigger than the biggest we've ever had in the history. Um, they, the amount of area that we've burned.
So, um, in 1972, which is the year I was born, um, the amount of land that was lost in California, um, Well, in 2020, we lost five times more land area that was scorched because the fires then happened in 1972. You know, that's the extraordinary amount of forest loss and, and real estate loss. So, so we're getting we're setting new records.
The biggest fire ever to happen in California history has happened in 2017, 2018, and then multiple times in 2020. Right? So this is. This is, um, It's a huge drain on California's economy. So that's just California. the same thing is happening in, the East coast for hurricanes. Harvey is a great example for what happened to Houston.
Um, the, you know, Puerto Rico for hurricane Maria. Um, you know, so the, the situation we're in now is worse than it has ever been in basically all of recorded history. And it's only going to keep getting worse.
I think, um, Mike Pence might, I think he said the opposite, Aaron.
Yeah, I mean, what's hilarious is, there is a federal report on climate change NASA the department of defense, the EPA, like it's all these federal, agencies . They all agree that this is a serious issue. Um, Except for the white house and the Senate.
Those are the only two. They didn't agree, but everyone else. And of course that's no longer true with the change in the election. you know, Biden administration is, is basically, you know, talked about putting $3 trillion worth of, uh, investment to use. Um, you know, if we got to build a lot of wind farms and a lot of solar panels, that's a lot of non outsource jobs.
I mean, you can't outsource. Driving the crane to put up the wind turbine to a call center in China. or I guess it would be India. China is not known for their call centers, but, but the point is by looking at this, like, okay, I need a massive jobs program.
And I'm going to use the stimulus that we need to do for labor post COVID and, and line that up with. what we need to do to meet, the necessities of climate change. And, uh, and that's basically linked it to as a massive jobs program. So he's, he's pledging like $3 trillion of investment to boost us manufacturing capability, because of that.
And that is a really huge deal because the crazy thing is people make money. Like these C's make money. When things change. And then when things don't change, when they're the same as they've always been, I mean, the internet was the biggest change ever for the telcos. But before the internet came along, you know, you got charged long distance to make a phone call.
When I moved to LA, I had to pay long distance to call across LA. and then the internet came along and blew all that up. and so if I, my. You know, when things stay the same, nobody makes money except the people who are in that position to just keep cashing checks.
And so the right way to look at climate change is, this is literally the biggest national security that we throw we have. And this is true of any other country, but it's also the biggest economic opportunity. That has ever happened. and so, there's a reason Amazon has a billion dollar fund and breakthrough ventures is not, it's another billion dollar fund. I mean, people with a lot of money are realizing that this is what the opportunity is ahead of us.
So I try to look at it that way. I don't try to look at the gloom and doom. because I think inspiration motivates more than fear, even though fear is pretty scary.
So what are the, let's take the inspiration. Where do you think the real opportunity is? At least from thin lines perspective.
so there are really big opportunities that. Breakthrough energy ventures, you know, Amazon and, you know, DBL these larger funds or looking at,
And breakthrough is bill Gates.
through was, yeah, it's bill Gates and a variety of other people that he has brought in.
Um, you know, bill Gates knows some powerful people and he made some phone calls, but, uh, but that's exactly what I feel when people think of like bill Gates is billion dollar fund that's breakthrough energy ventures. Um, And I don't know if Jeff Bezos said, well, I'm doing one of those too. Cause Amazon now has one and I'm sure, I'm sure, you know, Seattle is not a big place and the billionaire club was never any big I'm sure bill and Jeff know each other, but anyway, there is a lot of opportunity to invest that kind of money.
however, there's a lot of opportunity to invest. in companies that don't require $20 million or $50 million to deploy. and that's what I focus on, software companies or what I call CapEx, light hardware. So printed circuit, board assemblies, some sensors, some analytics, and that's the stuff I'm participating in.
So I have a, company that is, um, So electric vehicles use a lot of batteries. And if you're a car company or any manufacturer, there's incoming quality control, you, you test the batteries you get in you, you track all this stuff. And historically that's basically midden with Excel sheets, because if you buy a battery testing machine and test a bunch of batteries, you can probably track it on an Excel sheet because you know who buys a million batteries?
Well, Now a lot of people buy a million batteries. And so, you know, the, this is a cloud-based solution now, which allows a provider of batteries, a purchaser of batteries, anyone to track the battery performance through the supply chain, track batches against other batches. Um, but fundamentally it's a big data play with cloud-based solution and analytics, which if I didn't say batteries, I just said, Oh, this is a big data cloud based analytics company.
Any VC would say, well, that's it right. The thesis. I mean, that is, that's the kind of thing we're talking about, except in this particular case, we're talking about it, not for say drug tracking or not for booking hotel rooms, but for tracking the huge ramp that's happening now in the battery supply chain.
So, you know, that's a really good company that doesn't, um, Company is called voltaic by the way. But that, that it doesn't require a lot of capital and, uh, and the perfect investment for thin line, um, to participate in say the boom of electric vehicles without me investing in an electric vehicle company, for example.
So that's, that's the attraction that I see.
I would guess. And knowing your background a little bit, I would guess that storage is a big area that you spend a lot of time looking at it.
Yeah, I started or co-founded to energy storage. Well, he has three, depending on how you look at it, uh, companies, uh, out of Idealab or with bill gross at Idealab. and so I spent a lot of time looking at the grid scale storage market, um, uh, I see a lot of companies in with storage that I can't invest in, you know, a new zinc air battery, or new chemistry that, that, well, a material sciences outside my area of expertise, but B the, the capital, those companies require, um, is beyond what I would do for them online.
But, um, you know, one of the companies I met this company in 2014, They basically are building out Google maps, for the grid. And so they are not a storage company, but they can identify, Oh, if electric vehicle penetration is here and rooftop solar is here, then these are the locations on the grid that.
Storage is most valuable. So it's like, okay, I can, I want to participate in storage. I don't really want it invest or don't have the capability to invest in really capital intensive, you know, a new battery solution. So instead of investing in the gold mine, I'll invest in the map to the gold mine, you know, that fits my feet.
And so, so I, I consider that my energy storage investment, a company that identifies where storage is most valuable, rather than saying, you know, investing in a new. The battery chemistry. So, I'm very interested in storage, but, I'm interested in the, the companies that will help make storage work because I think storage is the next, you know, first there was wind then solar now grid scale storage is the next wave.
That's that's going to see huge growth. So I'm absolutely interested in that.
Are utilities, the customer for that.
So for this particular company, yeah. The utilities are the customer. Um, it provides a very strong, competitive advantage. It's it's a double edged sword, right. Uh, you know, if it's super easy to do customer acquisition, that's great. But that means it's super easy for your competitors to do customer acquisition, selling to utility, um, is challenging.
You know, it takes a while. They have to. Go through various layers of approvals. On the other hand, once you have sold utility and in particular, when you have proven to utility that you're valuable and then other utilities just say, look, who's the market leader here. We'll just go with who everyone else is going with.
Hmm. yeah, we often say, everyone wants to be innovative, but not first, all that helpful.
Yeah. Now the other phrase, and this was relating to, you know, new, like everyone wants to be first in line to finance the third project, you know, like it's the same kind of thing. Right. So you have to find a way to navigate that.
Yes. This came up in the context of selling, selling the hospitals, but I think maybe, maybe similar to selling to utilities,
Exactly the same dynamic. I'm sure a hospital doesn't, you know, sign a PO in a week. You know, they've got a process.
Um, any other lessons learned there? Like, are there different, um, from your time doing grid scale storage solutions? Um, yeah. I'd love to learn more about, yeah. Your lessons learned from building your own companies.
Well, in my case partnership matters, I spent over 10 years being, working with idea lab either in official or unofficial capacity. And, and that was the best decision I made right at the beginning is that, yeah, I could, try to slog ahead trying to do something on my own, but connecting with bill and, and working at idea lab, just, um, Opened up so many more possibilities, so much quicker you can't do things on your own, and you should know that and therefore find the people who will best help you.
For the things, at least the things you don't do well. So, so I, I, and, and that was kind of the, the, the situation for me when I was an entrepreneur.
I think, I think having the right partners who are helping you or support structure or something, uh, is really critical because it's too much to try to do on your own.
What was it like working with bill gross?
Bill is a very enthusiastic guy. bills. Biggest strength, I think is his ability to, excite people about what could happen. I mean, what's crazy is there were times that energy cash, the storage company I'd started, you know, I was supposed to, I'm supposed to be the cheerleader. I'm the entrepreneur I'm supposed to be, you know, this is amazing.
And I was sitting back thinking, Hmm, like this is really hard. Or I, you know, and, uh, And it's completely flipped. I mean, Bill's on my board, right. I'm supposed to go and present to him. And I was like, you know, I'm not sure. And I don't know how this works. It feels like no, no, no, no. It's going to be great.
We'll do this, we'll do this. We can totally do that. All right, let's get it done. Uh, and I thought this is bizarre. I'm supposed to be the cheerleader selling to a stodgy board instead I'm struggling with, you know, What every entrepreneur goes to these, these gaps of like, you know, not depression, but you know, how, how is this ever going to work?
Period? And, and bill is the one who is telling me that, you know, You know, this is fantastic and we just need to do this, this and this. And, and so I, um, I think that's his greatest strength. And then of course everything he does well stems from that, you know, he can recruit really great people because they want to be in that environment.
He can, um, you know, bring on supporters financially or customers early on. So I think his biggest strength is seeing what's possible and being enthusiastic about getting there. And I think that all entrepreneurs should be like that, but there is a reason that bill is, you know, as a class on his own.
can you also tell me a little bit more about. maybe it's energy cash that I think is a cousin with energy volt in some ways. Um, because it's super cool. And I was reading a little bit about both on the web, but I'd love to hear you describe what you were building have been
Well, so the whole thing started with bill looking at energy storage on his own So bill was wanting to be for something like this. And I literally walked in the door, and said, Here's what I want to do. And slide four of the pitch.
He's like, I love it. Let's start a company. And I was thinking, I hope this was hard, but I didn't realize that it was just the complete, a match of what he was wanting to pursue and what I proposed. Um, we pivoted as a lot of startups do to, you know, four months in, I said, look, I, I don't think the economics make sense for this thermal approach because honestly the economics drives everything for.
Energy storage businesses. and we pivoted to this notion of some gravity based solution and the cheapest thing that influences the, the thing that influences the economics most for gravity based solutions is the cost of the weights. And so we decided to use gravel and we ended up building something which looked like a ski lift, lifting gravel up and down a Hill, and that was energy cash.
Um, and then in 2012, We couldn't find follow on investments. I mean, now that the, the winter of, you know, clean tech investment appetite was well in place. And so the company ended up shutting down, ended up selling the IP and the patents back to Idealab. and that was that. And then I joined bill to be the CEO of a company called Helio Jen.
And, and he and I were working on this solar powered, company called helium Jen, but kept, you know, for the next one for three or four years, You know, bill and I would still kick around ideas, mostly bill, you know, come running in and after the whiteboard, he's like, why, why would you do this? And Hey, we should do this.
And I got this great idea. And, um, and I, I would say, yeah, I mean, yeah, that sounds good. Well, you know, what about this? Or what about that? And, and then in 2017 we, we shifted to a different direction. He found some people who, were looking at concrete as the weight. And I had thought concrete was too expensive, but he found a team, in Switzerland that had a lot of concrete expertise.
And basically the pieces came together to start energy vault, which is not a ski lift. It's a tower doesn't use gravel is, is concrete. And so, energy vault was started in 2017. And brought on a new CEO, a CTO, and put a really great team together in an energy vault has had a lot of success. They raised over a hundred million dollars from SoftBank.
They built a really, really impressive looking, um, you know, first installation in Switzerland. And, uh, and, and I am a early sounder and advisor to the company. ThinLine was. Up and running there around that time and I wanted to pursue inline, but I want it to help out as much as I could. And, so yeah, cousins is probably the best way to describe those two companies.
Can you give me the basics of gravity storage? Like I sort of understand it in the hydro plant example, and I kind of imagine it's the same with chairlifts,
Yeah, no, no, no. It's, it's the most basic of high school physics, which is E equals MGH. The mass times, the height that you lifted up by is the amount of energy it requires to lift it. So if you have all the blocks say sitting on the ground and then you build up a tower, then the height difference.
The age of the Eagles MTH will be the center of mass of the tower. So basically halfway up the tower. So you will get a height difference of ground level to halfway up the tower as your age, you will have the weights of all the blocks as your M. And then G is just G the, for wherever you, you know, the gravitational constant.
So if you can make your blocks cheap enough, then you can move an enormous amount of mass and then, and stored there for an enormous amount of energy, um, all with these, uh, very low cost concrete blocks. And so it, it functionally works by. The electric motor of the crane is the point that connects to the grid.
So you pull electricity from the grid to run the electric motor, to lift all the blocks. And as you are going the opposite directions, you pick a block and lower it to the ground. The motor becomes a generator and you put electricity back onto the grid. And, um, and it's a super complicated controls problem to make sure that you have nice continuous electricity coming on or off of the grid.
But functionally. It's a battery and it's a battery being run with really cheap material. So it lasts a really long time.
It's fascinating. It's fascinating, really simple and, and sort of novel and interesting. I mean like the fact that you were doing it with gravel and chairlifts essentially, that's my summary of your first company. So.
I built a ski lift in Irwindale in an abandoned mining pit, and it was, uh, it was on a. Google maps and Apple maps for very long time, until eventually they refresh the satellite. So now it only exists in pictures, but yeah, it was a lot of fun.
Awesome. is there other important things about thin line that we haven't talked about? I assume you're investing when companies are like raising their first or second round of capital really early.
So a typical check size for us is around 300 or $350,000. So, um, You know, I've had people say, Oh, so you're like an angel fund. Well, no. Um, the, and, and the reason for that is if we invest too early, we just don't have the capacity to keep investing in and, and supporting a company. So. Uh, it's definitely seed rounds.
Usually a series a round. It might be say I, um, it's $20 million valuation or something. Um, I liked my background is as a prior entrepreneur. So I'm in being active with every, with every one of my companies, either through a board seat or an observer role. So it's pretty hard to put in $300,000 into a company worth over $20 million and then say, Oh, and by the way, I want to be on the board.
Like, no, I own it. Sliver of the company. So it definitely is a seed stage investment where a company might be raising, you know, a million dollars and I might lead the round and the 300 or participate with 300 or something like that. Yeah. Um, it's, uh, I have invested in some later stage companies, um, But I certainly don't have a big enough fun to just buy my way into deals.
I certainly had to use my charm and convinced them that I wouldn't be a boat anchor and that I trust me, you're going to want me on your board because I'm kind of a smart guy and it'll be helpful. Um, but, but you know, I don't try to make that every single investment, um, it's better to invest more appropriate stage for the checks I can right.
Than try to. Uh, you know, but I have done that before. And so, um, but like I said, really early stage, um, especially if it's going to require a lot of capital, it's hard for me to do so. All of my companies and I didn't expect this when I started the fund, but all five of them have been post revenue, seed stage deals.
And, and, and of course, I didn't even think that was a thing. Like when I think a seed stage, I'm like that's pre-revenue, but it, I just, it shouldn't be surprising. Cause my whole thesis is like, Hey, I'm investing stuff. That's really cap X light, Um, so these are all companies that didn't require enormous amounts of cash to get off the ground. And so with a few grants, with some angel money, they've been able to get that traction. And then I invest with a goal of putting in money so they can really nail some traction and then raise.
Uh, you know, a healthy series, a based on the traction post-investment so, there's a lot of meetings for ThinLine capital. There's officially four meetings by the way, but one of them is this world that entrepreneurs find themselves in, of walking a very thin line. And that's what I find myself.
Like I want to invest as late as I possibly can. But before it's too late and the company takes off and now I can't invest. And so that's typically the, the round before the series a.
Yup. As to w I think it's the best risk reward. It makes a lot of sense. Um, before I wrap up and let you go, anything else you can say to just kick us in the pants and motivate us all?
I have great faith. you know, it's, it's a channel. My inner Gordon, Gekko of greed is good, but the truth is greed is a far more powerful, motivator than fear. And I mean, in investing, it's literally fear and greed, and for a very, very long time.
Like decades, a lot of the work being done at the university in your background, uh, people have known about the consequences of global warming and the only story to be sold was fear because that was the consequence. If we don't change this, we will have these effects. If we don't change this, we will have these effects and.
And I think the thing that's super motivating and greed is sort of a very, I need a better word than that, but, but everyone wants to be on the winning team. And this is now the winning team, renewables are cheaper than coal. Wind is like a defacto standard electric vehicles are going to be more prevalent than regular cars.
Like, like my kids are never going to own a regular car. I just know it want mostly because they're going to get mine with the Hemi down, which is an electric car, but not, but, but I'm saying like things that seemed impossible five years ago, how do you move the entire global economy? And you all of a sudden realized the global economy, we will move because people want to be on the winning side.
And this is a massive, massive opportunity. And so that's kind of, um, the thing that excites me even like from 10 years ago when clean tech was, this big hype thing, it was still a fear story. whereas now it's a w the world is changing. There's trillions of dollars at stake and, and thin line is like, One of the smallest players in this industry, not there, there's a lot of big money making this happen.
And that's, that's really encouraging that, that I, you know, I think it's amazing how fast things are actually changing and, and people don't realize that people don't realize how fast things are changing.
Do you have any lessons from other countries? Like, do you see other things going on in other countries that you're like, yeah, the U S needs to, well, other than the Paris agreement, are we now part of that?
We are, we are part of that. Um, so the, uh, what did Churchill say? They, you know, you can always count on Americans to do the right thing after they've tried every other option or something along those lines. I think that was, uh, that was, and,
um, um, the us is this weird. Super innovative leader and super conservative follower at the same time. And it's historically always been, and it's a function of having, you know, 320 million people in the country
you know, we, we showed up late for world war II. If the rest of the world thinks world war II started in 1939, um, we don't have that date. versus many other countries are like, if California were a country, it would be way more nimble.
And in fact, Mostly all the nimble things California does is when it just acts like its own country. Um, well, Germany can do that. Like Germany is not bound by, you know, I mean, yeah, they're part of the EU, but that's, you know, Europe is not a country. Um, and, and so the U S Is a huge laggard. unfortunately in all of this, Europe is far ahead.
I mean, individual countries in Europe are far ahead Australia. And in some ways Australia is a country that their entire economy is like shipping out coal. So they've dragged their feet on this for a long time. But in other ways they've implemented like way more aggressive, policies than the U S has.
And so, on the other hand, we were. We were late for world war II and we still, managed to put on a good show. So I expect that we are late to the game here, but I mean, China installs a staggering amount, you know, there's a, you know, like, Oh, trying to build a coal plant every week. Wow. It kind of builds in a staggering amount of wind turbines.
Right. I mean, it's just, so I think the U S is risk is, is that we. We fall behind and, you know, um, and there's certain things here, like solar manufacturing is predominantly done in China. but I think there's an opportunity to catch up. So, uh, we are a part of the Paris accord, and one of the reasons by the way is that we produce a lot of oil and gas.
So we had a lot of interests here that were motivated to, um, to not be part of the Paris accord, whereas. Um, a lot of other oil producing nations, Venezuela, and S you know, um, uh, Saudi Arabia or whatever, didn't have the conflicting, um, voices that we had here in the U S so I think now there's going to be a huge push to catch up and we're very good at doing that.
I mean, The sleeping giant has awakened to paraphrase here, a hotel anyway.
Um, Aaron, talking to you always makes me just like, want to stop everything and go help the planet. But, I appreciate so much the work you're doing and the fact that you took some time out to come on the podcast today. I feel like I should let you get back to work
Oh, it's a lot of fun. I mean, yeah. Super glad to.