 Good afternoon and welcome to today's energy seminar. Our speaker today is Arvin Gupta from Mayfield, also known as Mayfield Fund, also known as Mayfield Ventures. That's a 54-year-old established Silicon, sorry, Sandhill Road venture capital company. He is going to talk about what he's doing at Mayfield now, but I think the story that got him here, which he'll do better than me, started for me and Tom Hormio, who's up front here in chemical engineering and energy systems in engineering, where we share joint appointments, said I got an interesting guy I want you to meet. I said, Jesus Christ, he knows Bill Gates and all kinds of scientists, businessmen and celebrities who could be more interesting than that. So I wandered in, I think it was a Friday afternoon and met Arvin that actually went through an early version of this talk, which allegedly is a lot better now. So Arvin's deal is he was a bioengineer by training, and then, I think this is probably significant, worked in Shanghai for IDO on ideation and creativity for it. And then I don't know, the actual transition back got really interested in seeding VC funds with biojack people to ensure planetary health. And at that point, it was really based on food alternatives to animal products. And that led to his formulation with his partner here, Po Brunson, who's here with us. I guess he was one of the founders or early hires of IndieBio, which over a five-year period funded, see if I can get the number right, 126 startups, some of them are well-known companies now. And I think along the way, in looking at the pitches for the, hearing the pitches for the company said, geez, this is good for revolutionizing food, which does have a direct link to energy, but also is probably expandable into this frame that he calls planetary health, which means food health and climate change are all intimately related in a way that he described. He's won many awards and given many prestigious addresses and has produced this book, a book called Breaking the Code, which I highly recommend, by the way, which he'll talk about now. And he and Po are actually going to produce a trilogy out of that books by the same name. You'll have to have the cold ends or something for the sequels, a little bit like Lord of the Rings. So I talk too much, without further ado, the one and only, Arvin Gupta, Arvin. There we go, it is now on. Well, thank you so much, John. I really appreciate it, and it's been lovely getting to know you and Tom here at Stanford and getting to know the Stanford community in general. So yeah, I wanna talk to you today about reversing climate change through capitalism. And those are two words that don't often go together, I think. In fact, the only time they do go together is when you take out the reversing part, right? And so the way we do it is the subject of the talk and the way you can actually do this consistently and repeatedly over time is the goal of this talk. So first, John mentioned a few things about me, but yeah, I invest in companies. I'm an investor now at Mayfield as a general partner, prior to that as the founder of IndieBio. I invest in companies trying to reverse climate change, like I said, using capitalism as its engine. Prior to that, I was a designer, and I think that uniquely taught me to look at problems versus solutions. As a design director, I always said the best problems lead to the best products. So really take the time to find worthy problems. And as I was making my transition from being a designer to being a venture capitalist, I thought, okay, well, what are the problems that are gonna generate the best products in the world? And climate change really is the thing that emerged from that question. Where else are you gonna find consistent, durable problems over time? So with that, I did also write a book with Poe Bronson talking about the early stages of that journey called Decoding the World, and like John said, two more to go. So that's me in a nutshell, and I just want to share that with you a little bit. So the question is first, why is this important? I know it's a patently obvious question to many. Why is planetary health even worth talking about? And here you can see the an animation of the temperature rise every year from late 1800s. Here you can see World War II is happening and really oil has become the battery of choice for the world, and what that is starting to do for climate change. You can see inexorable warming of the global average temperatures. Now, it's really important to see one that this is a trend that's happening over time, but what's its effects? And it's projected that more people will die from climate change in the next 50 years than disease, all diseases combined. That's due to wars, translocations, things like that, that nature. And so even if you don't believe this, let's say you're a climate denier, right? This is just an anomaly, it's gonna go right back down. Sure, but if we can't figure out how to make capitalism sustainable over time, then we're gonna have a real problem with keeping things more equal and we're gonna have a bigger disparity between the haves and have-nots. We can talk about that a little bit more later as well. So in any way, shape or form, helping to make capitalism sustainable is the problem of choice for me. So I talked about enduring planetary health businesses. Why is endurance or longevity important? Because dead companies don't change the world. And so we need to build business models and build approaches in the marketplace that are sustainable for decades, not just to get in and get out as investors. And so these are some of the five-year charts of some recent planetary health-focused companies. Granted, a lot of this was driven by the 2021 hype cycle, right? So it's a little unfair of a chart, but it helped me make a point, which is we have to build businesses that succeed against other businesses that are not trying to make things sustainable. And really, we have to beat those companies at their own game, which, by the way, to give you the punchline, is totally possible. And in doing so, we have to look, okay, what are some lessons from CleanTech 1.0 that we can draw from? That we can say, oh, okay, let's not go there. Well, by the way, I don't know how many people have heard of CleanTech 1.0, but CleanTech 1.0 was a 2008-ish circa 2008 wave of companies that were really looking to replace oil as an energy commodity. And that was driven by excitement around biotech and hydrogen and other alternative fuels. And so I'm not gonna go through all of these because in the interest of time, there's a lot to discuss in this talk, and I promise not to keep you here until tomorrow. But in essence, the biggest, the big takeaway is you can't invest in high technology to make low-priced commodities. Low-priced commodities will never give you the margin that you need to put back into the business, okay? That's really what it comes down to. And I am excited to say that today is different. Today's different than 2008, and it's because we have a completely different social environment. We also have a completely different understanding of the problem that we're trying to solve. So CleanTech was really driven by this idea that oil was gonna go to $400 a barrel. Climate tech, the wave that we're in today, is driven by the idea that CO2 levels keep on rising. Those are fundamentally different problems. And so what's interesting is when fracking was invented, or became popular and widespread, the price of oil in around 2008 cratered, dropped to under 50 bucks. And that just basically decimated the CleanTech sector. Now, the people that were really sad about that were the investors. When CO2 levels drop, the companies that are still around are gonna be the ones that drove that drop. And the people that are gonna rejoice are society in general. So I think these are fundamentally different movements. And that's what I wanna really drive home, originating from fundamentally different places. But every tech wave has an amazing silver lining, the busts have an amazing silver lining, which is CleanTech 1.0 drove the cost of enabling technologies down dramatically, especially solar cells and other fundamental units of CleanTech. So here's a great slide of different technologies and their associated costs over time. You can see they all fall dramatically. The rate at which it drops is called the learning rate, technical term. You can see synthetic biology has had the most dramatic drop in sequencing costs, which is leading to all sorts of new data, allowing us to understand how to manipulate life fundamentally in much greater fidelity. There's also, you can see photovoltaics or solar panels have dropped by more than 97% ethanol. So there's a lot of hope for me that this bedrock of technologies can go ahead and help us drive more innovation, which is gonna be really important and very helpful because human desires are fundamentally unlimited. That is a truth that we must accept if economics is a field of study, which is the study of scarcity. If we didn't have unlimited desires, we wouldn't actually have any problems with scarcity. And so John Keynes talks about the invisible hand of the economy, it's not invisible, man. It's the hand of the consumer. And so where the consumer goes is where capitalism goes. So to direct capitalism to be a better capitalism, we must go through the consumer. And this is an issue because this unlimited demand is creating five earths of pressure on one earth of supply. So there's a conundrum. That's happening in real time right now, which is gonna get delivered on. Why? Because capitalism is short-term greedy, which is fine, which is fine. Capitalism works great for innovation, it works great for a lot of things. So capitalism as a force is really supported by quarterly earnings and the decision-makers making short-term decisions, which is changing, interestingly enough. Why? Let's go back to the hand of the consumer. They want innovation but they don't wanna pay for it. Enterprises have figured that out. And so there's a lot of goodwill, brand goodwill, being put to work to generate real value by showing consumers that they are sustainable. So this really complex chart on the right hand side basically says that 25% of Fortune 500 companies have made climate goals. $38 trillion, $33 or $38 trillion of market cap have said we are going to be net zero by some date in the future. Now those statements and those goals get translated into innovation through market forces. So this is the opening salvo. And again, I have hope that the voice of the consumer, the hand of the consumer will guide us there. So I think better capitalism, which is the same thing, will give people what they want without having to steal it from the future. And that actually creates a sustainable and scalable future for everybody. Again, even if you don't believe in climate change, what this does is it helps create more equality throughout the world in terms of living standard. And I'm a venture capitalist. So why do I care? Why do I care? Because you could make a lot of money by solving these problems. I already mentioned $38 trillion are being allocated, or not being allocated, but of market cap are looking at solving these problems. The entire world of GDP in 20 years will be $100 trillion. There's an opportunity. Now it's kind of doubled by 150. Sorry, thank you, thank you. Yes, it's gonna double in another 20 years. So the takeaway here is, look, all of these sectors have to become sustainable. And so innovation is gonna drive all of those waves. And the demand is on the other side. So feeding the world, building the world, and powering the world. Those are the three major activities through which all carbon flows through society. And those three major sectors are all becoming decarbonized in various ways. And I think one of the exciting things is, is getting decarbonized through a huge variety of different ideas and products and companies. Again, it's not this narrow area of activity. It's a broad revolution in movement. So why is now, again, different? Or how is this gonna work? I've just given you a bunch of paradoxes. If I'm in the audience, I'm going, yeah, I don't understand how that's kind of possible. And so I'm excited also as a venture capitalist because there is a lot of innovation happening in multiple areas of science that can be leveraged and harnessed to solve these paradoxes. So I'm not gonna spend much time on these slides, but I just wanna give you a flavor of the breath of what's happening in the world today. In just biology, we have genome editing and CRISPR. That alone has spurred a huge amount of innovation. Microbial solutions, so methanatrophs, as a matter of fact, we'll talk about this later. Methanatrophs eat methane gas. They've evolved to use methane as energy source. There's carbon capture, plants, trees, best carbon capture source we have. So making those even more optimal. Doing our agricultural systems to become more sustainable. These are all areas where biology has been innovating. And so I mentioned this is a company that Mayfield's an investor in actually called Windfall Bio, and they're using methanatrophs to take waste methane emissions from dairies, from oil fields and landfills, and using the methanatrophs to then create high quality organic fertilizer. How? Well these methanatrophs, when they're consuming the methane, they take nitrogen gas from the atmosphere, tear it apart, and fix that nitrogen into the amino acids that it's using to grow. And in doing so it becomes bioavailable. So that's a way of really starting to take some of the problems that we have and turning them into solutions. The Every Company is actually one of the first companies I ever invested in, formerly called Clara Foods, they are using synthetic biology to make egg whites without the chicken. So you could code egg whites, egg white proteins, into yeast, and then have the yeast basically brew them, and then you could reconstitute those egg white proteins into a product, and make them into things like macarons, meringues, and others. Geltor is another company that's using synthetic biology to create animal free collagens. And not just any animal free collagens, human collagens, for things like makeup. When was the last time you can get a human collagen for makeup? It's not possible. Upside foods, many people have probably heard of cell-based meats, or cultured meat. So upside foods makes actual chicken without the chicken by growing the actual avian cells in culture and then reconstituting that into chicken breasts. They're now being served at Bar Cren or Atelier Cren. So that's just biology. Chemistry, huge advances as well. For carbon capture and storage, this is, there's a lot of applications using moths, using different types of CO2 to fuels, electrochemistries. There's also, some of the advances in chemistry can really help us think about sequestering large amounts of carbon, like enhanced rock weathering and things like that, other approaches similar to that. Direct air capture, if we can get better sorbents, adsorbents, we can figure out how to actually remove some of the CO2 from there, which is very hard to do energetically. So more advancements in these areas will turn that into a focus area that might bear real fruit. I could go on, but let's just take a look at some of the companies that are also starting to commercialize these technologies, like 12, using electrochemistry to take CO2 and turn that into plastics fuels and other products. And they have a collaboration with Mercedes-Benz now. Again, showing that there's real economic interest in this. There's real, and it's all being driven by enterprise. I think that's one of the big things that's changed recently, is enterprises have really woken up to how to address this. Climeworks is a company that is doing direct air capture. This is in Iceland, I'm married to an Icelander, so I know this company well and have visited them many times in the past years, but they're looking at and figuring out how to best capture the CO2 and do this in an area that is got free, well, very cheap energy, geothermal. Lithos is a company that is using olivine and basalt to do enhanced rock weathering. So when olivine and water come together, it's able to pull CO2 out of the atmosphere and then it makes its way all the way to the ocean where it goes down into the sea and gets stored for thousands of years. This is the natural weathering problem. That's the natural system that happens in climate today. It's just doing it way faster. Lindgrove is a company that is making wood without trees by using flax instead with a bio-resin. That's a guitar that top piece is not from a tree. It's made with a resin and flax. So again, if we can leave our trees in the ground, rather than cut them down, it's a lot better for our future. Physics. So yeah, even physics has a ton of advancements recently that are driving things forward. So from quantum computing actually, which is interesting, because I meet with quantum computing companies every once in a while, and a lot of them talk for their first applications being coming up with new materials for climate change, for mitigating climate change. There's incredible buzz about fusion and fission and other areas. So speaking of which, common with fusion systems recently raised $2 billion with a B and is getting from what we hear closer and closer to actually creating a sustained fusion reaction. I was talking to an investor about this, and it was an interesting conversation because I said, well, electrons are pretty cheap, right? We're gonna put a lot of investment into fusion to make pretty cheap electrons. And their comment was really great. I said, well, demand for these electrons are gonna go way up, continue to go way up. And so we need sources of those electrons that aren't determined by the wind and by day and night. And so this is a huge step forward once this is able to happen. But it's no longer pure sci-fi. I think that's the biggest thing for me that's changed from even five years ago. There's a lot of buzz about the superconductor on Twitter. Like what was it like three or four months ago? I thought it was kind of funny, but it is a holy grail. And the idea of a superconducting wire to losslessly transmit electricity over long distances would have an enormous impact on our ability to mitigate climate change, just for moving energy around. So there's a company called Inertly Materials that's working on that. And then nuclear fission reactors, good old-fashioned fission reactors, coming back into finding new application areas. Here's radiant, which that is a rendering of something that goes in the back of a semi. So you can just drive it around. And so as the public starts to come to grips with the safety systems, and as we believe that fission can become safer and the waste can be dealt with, it becomes a very viable alternative to creating electrons that aren't dependent on intermittent sources. And AI advancements continues to go. The advancements in computation, especially in the past six months, as everyone here knows, with large language models and AI, is truly an extraordinary pace of change and innovation. So this has direct impact in climate technologies because we can start doing things like create digital twins of agriculture, digital twins of the national grid, and figure out how to optimize how things are going and reducing waste. We can start looking at our waste chains and our supply chains and optimize all of those. So a Mayfield investment is Chemics, which is using AI to design batteries, better lithium ion batteries, because they could search the entire space of mixing electrolytes very quickly and optimize it for very specific conditions. Another one's Amphrobotics. This is a company that's using vision to look through the trash. And as the trash gets, there's got robots, it sees, and you can create better and more pure waste streams that have higher value, and that value can get turned over. Avallo is an AI company that is using AI to look at genomes, plant genomes. And in doing so, look at creating rice that doesn't release methane and more tolerant species for drought in other conditions. Framework44 is a company that's getting incubated that is using LLMs to design better catalysts, moffs in particular, to actually find, do the search space for converting CO2 and other chemicals into other higher value chemicals at a lower cost. So the one thing you might notice through all of those is that all of these examples, all these companies, what's common? They're all deploying those technologies to mitigate climate change through products, through products that people use, whether they're enterprise or consumer, but they're products, physical thing that gets sold. And so there's three paths to market for any product. You could either be better, you could be cheaper, or you could be required by law. So for venture, as a venture capitalist, I live in bucket number one. Bucket number two, cheaper products have a place in the world. They tend to be lower margin, and so different capital sources can fund those as they scale up. They just require a lot more capital upfront. And then required by law, that's just a tough one to predict. So an incumbents usually win those, which again, it doesn't mean that's a bat, like we should, I think law is important, right? There's, we shall be wearing seat belts. That's a good law. But as a VC, I think we live in bucket number one. And so, I think this is really important. The best sustainability companies are really the best product companies. And I'm gonna use Tesla as an example a lot, so please bear with me on that. But I just can't think of a better example in history. And we'll go over why. But just as a little anecdote to bring it home, our Subaru outback died. And so, me and the kids, I have two girls, six and eight, and we needed a new car. So we're gonna get a minivan because we were renting a Toyota Sienna. While we were getting a new car. And it's like an apartment on wheels, I don't know if anyone's seen one of these things. It's like literally a box, a giant box on four wheels. And it's super fun for them. And so, Krissa, my wife and I were talking about, oh, we should just go test drive a Tesla. Like we're trying to reverse climate change through our investing, might as well do it through our actions as well. So we get in the car, we go to the Tesla dealership and test drive a Y, it's got seven seats. And we leave the, I'm driving and I leave the Tesla a lot. And I make a right and stomp on the accelerator and we shoot down the road like a rocket. And the girls in the back start screaming, Tesla, Tesla. And right there as a family, we made a product decision, not a sustainability decision. And I think it was a really important lesson for me as a VC in that moment. And so, I think that's where we see it. And there's a lot of decisions that Tesla has made that make the company that it is. And so, if we're trying to figure out how to make capitalism sustainable and we know that it's going through products and we know that those products are created and deployed by companies, question could naturally ask is, what are the common traits of great planetary health companies? Can we learn something that is common to them all and repeatable? And so, as a partner Mayfield, I talked extensively with the managing director, Naveen, who's had decades of experience in the space, had my entire Indie bio experience from the past 10 years. And so, we also looked at public company comps. What do companies look like after 10 years in the public markets? Where do they evolve to? How does it go? Because if we need to build companies that stand that test of time, what can we learn? So, what follows is really a summary of 10 traits that are common to the real outliers in the past years in planetary health. So, one man is just uncompromising founders. Uncompromising. Notice I don't say mission driven, notice I don't say unreasonable. It's a very specific word. And this is the thing that in my own experience have seen over and over again. These really great founders are uncompromising. They have a bar, they have a really high bar for themselves, for the problems that they're trying to solve. And they bring that to them, to their work, and they bring it to the teams around them. So, they also go all the way because they're not looking for a quick financial win. They're looking to solve a problem. So, they also tend to set really, really good goals. Goals that are hard to understand from the outside. But make complete sense to their own internal guidance system, which turns out to be right in the long run. And so, these uncompromising founders tend to attract N of one teams, what I call N of one teams. That means the A team. I don't know how many kids from the 80s are around. I might be the only one. But yeah, so there was a TV show called the A team. And it really is about the best team on the planet with the best expertise in the area of problem that the company is trying to solve. And uncompromising founders can bring those types of people together and then set those goals that the A team could go and execute on. And that becomes one of the best moats there is. You might be able to copy an idea, but how do you copy a team? One company has the best people in the world. It's gonna be tough to catch up. This N of one team then always generates 10X products. What's a 10X product? It's a phrase that captures the idea that a 10X product is a product that once I use it, going back to the old way is something I could never do again. It just becomes patently silly to go back to the old way. The iPhone is a great example of that. The whole world was using blackberries, mechanical keyboards at the time. And uncompromising founders named Steve Jobs decided to just make it all glass. And within just a year or two, a few years, the entire world switched over to that modality. There's no way you can go back. That's what a 10X product is. After driving, you have two Teslas now, I can't imagine driving a gas car. 10X products, the great thing about them is they generally create high gross margin potential. Why? Because they tend to be premium. People will pay anything. Everyone talked about the iPhone when it first came out. Oh, it's so expensive, no one's gonna afford it. Well, guess what? You save up. People will save up and spend a disproportionate amount of their income on that product. As the cost curve is coming down on Tesla, originally it was still a very premium product. It hit a trillion dollar market cap as a premium product. Now, a high gross margin is also relative to its TAM, total addressable market. So that's something that's important to talk about. Generally when you have a very, very large TAM, a trillion dollars, 500 billion dollars, you can have lower gross margins than say software. That's the classic example, 80% gross margins in software generally. But if you could generate 10, 40 billion dollars of revenues a year, that supports valuations that still makes sense for investors. Number five, these products tend to be a daily habit for someone, for someone. And why does that generate, why is that a common trait of these companies? Because when it's a daily habit, it lives rent free in my mind. I talk about it with others and I don't have to spend as much on marketing to convince you of anything. Tesla spends zero on marketing. Number six, they all control their destiny. So that means owning a path to your customer either through direct distribution or through the ability to communicate your brand values or your values or your value proposition to the customer. So this is Michael Works, an IndieBio company that has invented a way of creating leather from mushrooms. And so the product is called Rishi, they named it Rishi and it's a B2B product, fashion houses buy this product but they talk about it as Rishi as a material. It's not mushroom leather. That's critically important for Michael Works to capture the value that it has created. Here's one that's interesting to me is they've all innovated in the assembly line. Here's a picture of the gigapress. This is a giant press that can make the Model Y in three parts, the shell. And that's critically important because it allows you to lower costs and get to better gross margins which allow you to spit more money back into the company. It's a flywheel of good. So all of these great plans for health companies figure out how to innovate on the production side as much as on the product side. They also tend to work with corporates and governments to their advantage. SolarCity was a solar panel installation and distribution company that started by Kimble Musk and they were very good at this. There's a lot of tailwinds right now in sustainability with the Inflation Reduction Act and companies are taking advantage of it today. So this is something that allows you to have to raise less money and get subsidized for it. Then you have to have a durable note. This is an important story that I'll talk about shortly but you can create a bunch of value and be unique and have a 10X product but if you have no way to defend it it's over within a couple years because everyone will see it, copy it and you're left scrambling to catch up. Oftentimes what that means is spending more money. So with high tech you could try to use IP but I think execution is the ultimate mode. So if you can really just attract the very best people and it goes back to if you can get a lot of these traits these common traits, it's a flywheel that enables you to keep ahead. Finally, this is becoming more and more important in our current financial environment, capital efficiency. Planetary health companies tend to be capital intensive and so any company that is loose with its finances tends to run into trouble. So great founders really are constantly thinking about the ROI of every dollar they spend. We're gonna spend a dollar hiring someone or doing an activity. Does that generate $2 of value? Asking that question on every decision. And they also find other sources of capital, debt versus equity, things like that. So from those 10 we can come up with these simple 10 KPIs that can help guide the way. And these change over time. What the right shape is changes over time which we'll get to in a moment. But ambitious goals. Do you have ambitious goals with clear milestones? Do you have a unique 10X product? Unique is really important, right? It's really hard like I said to be 10X on everything. So what are you gonna be uniquely great at? Tesla doesn't have better range than a gas car. But that's okay, that's not the point. That's not the value proposition. A massive 10. And the 10X product helps you understand that 10. In other words, if you are 10X better than a substitute that substitute is your real 10. You might be able to grow it over time as you get better at other things but then you could be very precise. High gross margin potential. Fast cash flows baked into the business model. So all businesses go through this loop. Cash inventory accounts receivable back to cash. The company that could do that the fastest generally wins. So if you can find ways of speeding that up you'll be in a better financial position to weather storm. Be a daily touch point for your customer. Figure out how to become that. Again, look at your operating efficiencies. Making sure that there's a direct relationship between you and the consumer. That you have a moat and that you leverage the capital that's available for free. So let's do a quick case study. Case study is probably the wrong answer. It's not very detailed. So this isn't going into a 20 page discourse here. But a quick snapshot. Let's just take these KPIs and take a look at two companies and see what they did. One left is Tesla. The one on the right is Beyond Meat. They're both public companies. So you're able to get some data on them and take a look. So let's go ahead and take a look at Tesla. Ambitious goals with clear milestones. Yep, Elon Musk always puts out very ambitious goals. He said Cybertruck's gonna be ready. He might miss some. He might, just maybe. But it drives the team. Do they have a unique 10X product? Yep, people love. And again, I say the quickness of Tesla. There's something precise there. There's a lot of reasons to love those cars, but there was something precise in their entry point with the Roadster. It was built as faster. Massive Cham. Yep, cars are 1.5 trillion. High-ghost margin potential. So this has actually dropped since the last quarterly announcement, but the 13% industry average, Tesla's higher than that. And it's rewarded in the public markets with a massive enterprise value to revenue multiple. Does it have fast cash flows? Yeah, it's innovating. It's okay, it's not super fast. Yeah, there's a daily touch point. It's fun. People talk about it. They have good operating efficiency early on. Now, that's dropped. The operating margin is 7.6%. So that is accurate. And I think that's the, but there's room. Because of that operating leverage, there's room to fight a price war, which is what Elon has started. And he knows that everyone else has to create a lost leader for them to stay in the EV business while they learn. There's a direct relationship with zero spend. Such an important lesson there. Zero spent. The Gigapress makes production cheaper, but the supercharger network makes switching costs extremely high. The Tesla supercharger network. Man, switching out of that. It's so high that I think like the government's stepping in and helping to make it available to everybody. I didn't know this. I looked this up. Tesla did actually receive a $465 million loan pre-IPO, which it fully repaid. I think it's the only car maker that ever repaid its loan or something like that. Let's take a look at Beyond Meat. So Tesla's not bad on that list overall. Beyond Meat was the darling IPO in 2020, 19 maybe? 18, something like that. June of 19, yeah, thank you. And it was also one of the only pure play planetary health companies you could invest in at the time besides Tesla. So is there ambitious goals with Clear Milestones? Yeah, there's a stated goal of being better for the planet, but it's not precise in its messaging. They're not like beyond 3.0 burgers coming in June, right? Is there a 10x product that people can't live without? So it's red now. It was green, what, six years ago? It was green six years ago. There's an important lesson in here, which is it was green for vegetarians that had boca burgers, frozen patty boca burgers is what they were called. They are called, I think it's still around. And the substitute product, Beyond, was way better. But the market size for boca burgers was like $200 million to the most, $100 million, not one trillion. So by being precise, we can get to actual market sizes and understanding what the total sales potential could be. And so to Beyond Meets credit, it's done an amazing job of expanding the TAM of plant-based meats and burgers, which is now $5 billion. That's a huge increase. High gross margin potential. It actually had pretty good gross margins when it IPO'd. The S1 showed it was at 26%. It's now at negative 2%, which is killing the company. Why? Because it doesn't have a mode. And so everyone comes in with a plant-based burger. So spending on advertising has to increase massively. Production has to spin up. There's a lot of issues you have to solve. And so therefore gross margin goes way down. Is there a daily touch point? Is there a fast cash flow? Yeah, it's a daily habit, buying a burger, eating a burger. It's a daily thing for many, many Americans. The operating leverage and operating efficiency for the reason that I just talked about is now staggering negative 82% operating margin. That's tough. It's tough. Yeah. I'm getting the, we should move on. It's five, I said I'd be down to five, 20. Okay, there's a mode built into it. There is a weak mode. And that's been the biggest issue, I think, with Beyond Meat. So getting to the end of this presentation. These are 10 principles. These traits can be used as principles to design and during businesses. And it doesn't mean that you have to have all of them maxed, that's the wrong takeaway. There's a shape to these, if you think of it as a graphic equalizer, what's the shape at different time points in a company's career or questions later? And one thing to take away, right? 10X products win. If you could do one thing, if you just walk out and remember one thing. 10X product, be unique, differentiated, and win on one dimension that you could own. And so for me, what gets me excited is actually this idea that using these common traits, using all those technologies I talked about, and shared, this incredible diversity of innovation that's happening right now can truly create a utopian idea of what a future is. Which is better products that don't take from our future. So, Tom's suggestion. Here's some future work that we can do to think about how to push on some of these ideas. Is there a quarterback ranking? Like where you could just boil this down into a score for a company? Is there a universal law or metric that can explain how climate tech adoption curves are happening? These KPIs, can we make them quantitative? What are the relative weights? And what are new models for financing? I think that's an important one. There's different ways of getting to market and not all of them need venture capital or should have venture capital. Not all of them can create venture returns, but they're companies that need to exist. So, thank you for listening. I really appreciate it. I want to say a special appreciation to Naveen Chala from Mayfield, Poe Brantz from Indian Divyao, and Jocelyn Kinsey from DFJ Growth who all helped me revise and refine this presentation for you all today. So thank you very much. We have time for just a few quick questions here. Students first and student questions. Actually, I figured out what your volume three it's going to be. It's going to be the screenplay for Aventura 3. What do you think? Sounds good. Thank you guys. Questions, let's go over there. Burris. You're good. You're good. Burris, thank you so much for coming and speaking. This was very interesting. And I think it's a really interesting lens to look at venture capsules and through climate change. And I guess I wanted to ask, what was kind of the background, be it through education or internet experience or industry work that kind of led you to this English area? Yeah, it's a great question. So I studied molecular cell biology and genetic, with an emphasis in genetic engineering at UC Santa Barbara. I then went into finance, as one does, as an options market maker on the Pico's Exchange. And from there I learned that making money without creating value wasn't something I wanted to do. So I went to figure out what it is that would be something that I can do to create value. And that's how I found design. And really for 10 years at IDO, what I did was building businesses through product. And I was constantly looking for the constraints that lead to great products and great businesses because of that. And that led me to understand that the problems of climate lead to great constraints and ones that we haven't considered. And when we consider those constraints, we can build better businesses. And that's what led to this talk. Arvin, great talk, really enjoyed it. And I wanted to get your take on things from your top 10, if you could just flip through real quickly and tell me which ones you think are non-negotiable. As you said, we can't have all of them, but which two or three do you think you really have to have? Yeah, that's a great question. Thank you for asking that. Let me see if I can find it. Let's see, I should have had a summary slide. Yeah, they're kind of like versions of them. The 10x product is really the non-negotiable because unless you can do that, you don't have a path to change. That is the path to change. And so it's iterating on that until you find what is the 10x for it. It doesn't matter if it's a smaller market. If that's a natural thing when you're finding real 10x products, your market size naturally gets smaller because there's fewer people that are willing to pay even more. A good question to always ask yourself of startups often is when I meet them is what would it take for a customer to pay double what your offer, what your price is today? Is there a customer that would pay double? Because now you found your actual price, right? So I would say that's the number one thing, non-negotiable. And then because everything flows from there. Thank you so much for the talk. So you mentioned the 10x is kind of like the non-negotiable. And you said beyond meat, it's kind of like non-differentiable anymore because of these other meat companies. But why is Tesla still differentiable compared with other electric car companies? They all are quick and they all got these fancy screens. That's right. That's a great question. They have two things that are really going for it. Well, one, they could stay in business because they make money from selling cars. So don't underestimate the fact that making money is important in the long run. Two, and that's because of the, like I mentioned, the gigapres and innovating in the assembly line and taking out SG&A costs like advertising and all of this overhead, distributing directly through apps. There's a lot of things they're doing from a business perspective that allows them to make more money than others. Then, and the most important one I think is the switching cost of the supercharger network. Leaving the supercharger network is really hard once you're used to it. And so I think that's what is creating a differentiated product. The rest of those features, you're right. Everyone's like, oh man, people really want an electric car because of those features. So they go after those features, but they realize that that's not the long-term competitive advantage of Tesla. Great, I think we're just about out of time. So Arvin, thanks again for a truly inspiring talk. Well, thank you guys. Hope you liked it. I'd love some feedback.