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Emily Kirsch

Founder

Powerhouse

September 7, 2021
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Ep 43: Emily Kirsch - Founder, Powerhouse
00:00 / 01:04

Adam Zuckerman
Here we are today on Energy Impact Podcast with Emily Kirsch. She's the Founder and CEO of Powerhouse, Emily, welcome to the podcast.

Emily Kirsch
Hello, Adam. Thank you so much for having me.

Adam Zuckerman
It's great to have you. So you're joining us from the West coast in the San Francisco Bay Area and we're going to get into a deep dive of what Powerhouse is and the important role that the organization plays in the startup space. But first, we want to learn about you. Emily, tell us a little bit about your background and what led you to starting Powerhouse.

Emily Kirsch
Great. I started my career here in Oakland at an Oakland based organization that was founded in 1996 by somebody who is now nationally recognized as a political commentator and social justice advocate. His name is Van Jones. And I worked at the organization he started, first on local workforce development- so helped create one of the first job training programs focused on climate careers - then worked on securing unanimous passage of what was, at the time, one of the most ambitious climate action plans of any city in the country. And then worked on state ballot initiatives to protect California's clean air and water laws. Van got to join the Obama administration as a Jobs Advisor. And so when he was in DC, he called one day and said, I am friends with Prince - like the music icon Prince - and I was like, of course you are.

Adam Zuckerman
As one does.

Emily Kirsch
And Prince did all of this secret philanthropic work all over the country. He cared about climate, he cared about job creation, he cared about communities like Oakland. Van was like, What should Prince do? At the time, a mutual colleague of Van and I named Billy Parrish was starting a company called Mosaic. Mosaic has gone on to become one of the largest financiers of clean energy projects for homeowners in the country. But at the time, Mosaic wanted to pilot a business model that would crowdsource capital from people like you and me to finance solar on nonprofits and community-based organizations. And so Van and I said, Well, what if Prince gave a grant to Mosaic to help them pilot this platform in Oakland. And so Prince did, and to this day, if you drive around Oakland on almost any freeway and you see solar on a church or a nonprofit, there's a very high likelihood that it was funded in part by Prince and by Mosaic through their platform. So I got to work with Mosaic on their pilot. I was helping connect them to their initial customers. My colleague was helping them raise capital from colleagues of his that were angel investors. And in that process, I was so inspired by what Mosaic was doing I thought, this is the San Francisco Bay Area. A global hub of innovation, global hub of venture capital. There must be an entity that is bringing together corporations and entrepreneurs and investors to accelerate this kind of work. I looked around for it for about six months and I didn't find it, because it didn't exist. And so in 2013-

Adam Zuckerman
What year was this?

Emily Kirsch
2013. Well, this was all happening in between 2010 and 2012. Then in 2013, I left my job at the organization Van had started to start Powerhouse to be that entity that I couldn't find.

Adam Zuckerman
That's surprising. With so much entrepreneurial activity in the Bay Area, there were no groups for renewables and clean energy eight years ago?

Emily Kirsch
Not structured in a way- there was one that's no longer around, but none that were structured in a way to bring together those three pillars of investors, corporates, entrepreneurs. It just didn't exist. And so I thought, well, I should give this a try and see what happens.

Adam Zuckerman
Well done. Okay. So you decided to start Powerhouse. It's an innovation firm and venture fund that's striving to be your partner in building the future of energy and mobility. Can you tell us a little bit about how you came to the idea of finding and identifying those three pillars, bringing them together? And was it an all together approach? Or did you say, We're going to start here and then organically grow on to the other pillars?

Emily Kirsch
Yeah, good question. We actually started as an incubator and accelerator. The incubator was physical space. At one point we had about 130 entrepreneurs in the office, which was a lot of fun, across maybe 25 or so different startups. So that was the incubator, the physical space. And then we also ran an accelerator, which is the physical space plus programming and capital to support companies. We moved away from that model, in part because I didn't want to be a landlord. With the rise of co-working spaces, that became less of a limiting factor to entrepreneurs. And given the virtual world that many of us live in today, the emphasis on space, at least for more software-focused companies has become less relevant. And we moved away from the accelerator model because it is time bound. If you were to join a cohort, you'd be in it for six months. But if you came to me a month into a cohort and said, I have this great idea, I'd love your support, I'd have to say, We'll come back in five months when we're done with this cohort. And so that that doesn't really help you in the moment. Nor from a venture standpoint, does it get me the opportunity to back you when the time is right for you. So we moved away from that model about three or four years ago to become what we are today, which, as you said, is an innovation firm and venture capital fund. And you're exactly right, the innovation firm works with some of the most ambitious corporations in the country and across the world who have set these ambitious climate commitments and want to partner with outside innovators in the form of startups to bring those technologies into their companies to help them meet and exceed those climate targets. Okay.

Adam Zuckerman
This is a phenomenal explainer of how this progression is taking place. We have listeners from around the world. Some are at different levels than others. Let's take a quick step back though. Can you define the difference between an incubator and an accelerator and an innovation firm, so people can get a better understanding?

Emily Kirsch
Yeah, definitely. Good question. Oftentimes - not always, but oftentimes - incubators, accelerators are nonprofits. Powerhouse has always been a for profit, so that's a big difference. Then incubators are typically oftentimes just physical space which, I don't want to diminish the physical space. It's incredibly important. One of our close colleagues and partners is a group called Greentown Labs, which is the biggest incubator for clean energy and climate technology in the country. They are providing physical space to entrepreneurs. Especially when those entrepreneurs are focused on hard tech and hardware, they need physical infrastructure to do their manufacturing and R&D. That's typically the incubator is like physical space for both people and for the equipment that you need to build. Whereas an accelerator may or may not include physical space, but is more focused on programming, mentorship, advising, oftentimes, there's a capital component. Y Combinator is one of the most well-known examples of an accelerator, where they're providing advice, capital, network, in exchange for equity, which sometimes is the case and sometimes not. That's the big difference between an incubator and accelerator. An innovation firm is not so much focused on providing that physical space to entrepreneurs or even providing the programming. What we found and what we heard from entrepreneurs for years is, what is most valuable to them is connections to customers and connections to capital. That's what we focus on a Powerhouse by working with corporations who are our clients. They come to us and they say, These are the areas of climate tech that we're most interested in. These are the commitments that we've made. We want to meet these types of startups in this industry of this stage. Then we use a proprietary database of thousands of startups to help them identify the companies that they could become a customer of or invest in or acquire. The ultimate outcome is that our clients, the corporations who we work with on an annual basis, they play that role in the life of a startup as customer, investor, acquire. And we help make those connections in a way that is much faster for the entrepreneurs to get access in a way that they wouldn't otherwise and accelerates the ability of corporations to find the technologies that they're looking for.

Adam Zuckerman
You're serving as that broker and matchmaker between the startups and the largest corporations. How are you identifying what those match points are? I imagine that one corporation that's a Fortune 500, very large that you're working with, is going to have very different needs and expectations from the next one down the line. How are you managing that process?

Emily Kirsch
Yeah, definitely. You're exactly right. Our clients include some of the biggest utilities, energy companies, tech companies in the world. And so-

Adam Zuckerman
Feel free to name drop it it's comfortable.

Emily Kirsch
I think we can probably name drop a few. Let's see. Enel, which is a utility out of Italy that has deployed more renewables than any other in the world. Schneider Electric out of France, but has global operations. Google, the name that everyone knows. Those are just a few examples across those three groups of utilities, energy companies, tech companies. And it starts with them. Based on the climate commitments that they've made, they tell us the areas that they are most interested in diving into over the course of let's say, a year, and then each quarter we'll do a deep dive into a sector area. Forecasting, for example, is something that we've been working on with a major international energy company. We've been helping them find and evaluate forecasting solutions across electricity pricing, electricity demand, renewable generation. By understanding their needs, we can then dive into our database and we've been able to source about 50 startups that are developing innovative forecasting applications. And we're in the process of evaluating those startups based on the client's needs, so that we can determine who is the best fit and narrow that down to a list of maybe five to ten, who this client can then meet with, understand the business model, the value prop and determine if and who they want to work with.

Adam Zuckerman
So if you're looking at that startup funnel that you might be making that introduction for, there are the unknown companies that you haven't identified yet. There are the identified companies. There are identified companies which you're speaking with or have relationships with. And then that final bit would be those that you're actively working with and have made a successful introduction for. Can you walk us through that funnel of how you identify and work through and where those conversations actually take place? Are you trying to establish the relationships before the questions from your partner corporations come in? So you go, Oh, we've already identified these companies for you. Let us make an introduction? Or does it work backwards where a Google or an Enel may come to you and say, This is the challenge we're having, and then you set off together?

Emily Kirsch
Great question, a little bit of both. We add about 400 startups to our database every quarter, so about 1,600 a year. That process is happening, that machine is rolling no matter what. We're constantly scanning a bunch of different sources to bring that data in. But you're exactly right. The value is not the data. People have access to Crunchbase and PitchBook and you can get all the lists of startups you want there. What's unique about Powerhouse is that we talk to most of the startups. If they're high quality, doing interesting work, we have a conversation with them to really understand their team and what they're building, the technology, so that when our clients says, I'm interested in, let's say, forecasting, we're giving them not just a list of startups, but our analysis and recommendation for who they should be talking to based on those conversations we've had with the startups themselves. That machine is running in the background of bringing in hundreds of startups each quarter. That enables us to then, when a client expresses interest in a sector area, we can then pretty efficiently get the companies that may be of interest in front of them. That being said, You're exactly right. Do we know every single startup in the world who's doing something in that space? No. And so there is an added level of work that's required to see, who do we already have, but then go beyond that and make sure that, if we're doing a competitive analysis for a client, we want to know that every startup that they should know about is represented in that landscape.

Adam Zuckerman
Are you able to speak to a little bit of the venture aspect of it? Are you trying to invest for Powerhouse itself with LPs? Are you trying to lead toward a strategic investment from a CVC, a corporate venture capital arm, of one of your partner companies? What are all the expectations and opportunities for capital in the mix?

Emily Kirsch
Yeah, great question. About three years ago, we spun up Powerhouse Ventures. It came out of our work of the innovation firm. We had thousands of startups at our fingertips. We knew what corporate clients were interested in finding and buying. So we realized that, not only did we have all the information at our fingertips, but there was no seed stage software focused fund for climate in the country. It just didn't exist before Powerhouse Ventures. And so I had that same feeling that I had starting Powerhouse and was like, how does this not yet exist? We should start it. So in 2018, we launched Powerhouse Ventures and we back founding teams that are building innovative software to rapidly transform our global energy and mobility systems. The fund is backed by industry giants, like Total, one of the top five energy companies in the world, as well as some really known leaders in the energy space like David Crane, who's the former CEO of NRG, Dan Shugar, who is the Co-founder of NEXTracker, and Howard Wenger, who's the former President of SunPower. Kind of Generation 1.0 of clean energy pioneers have said, I did well in this industry, I want to back the next generation of clean energy entrepreneurs who are less focused on hardware. While that's still important, and a lot of respect for the funds that are playing in that space, our focus is on software solutions to drive proven technology to scale globally as quickly as possible using software financial technology, ML & AI applications. Through Fund 1, we have invested in 20 startups to date. We'll finalize our remaining five investments between now and the end of this year. We've invested in companies that a lot of people know if you're in the space, like Leap and Raptor Maps and Station A and Tera base and Solstice and Recurrent and many more. And then we'll keep going from there.

Adam Zuckerman
Is the focus of the fund for companies that are focused on US domestic opportunities, or is it international focused?

Emily Kirsch
International. We have portfolio companies that operate in just about every continent. Most of the portfolio companies are incorporated in the US, but they can operate anywhere in the world. And for exceptional cases, we will back startups that are incorporated in other developed markets. But you're exactly right. You mentioned earlier the role of the firm and there's the synergy between the firm and the fund. All of the data information that the firm is gathering through our work with corporate clients and through the database, we use that to inform our investment decisions with the fund. And we've co-invested with clients of the firm and LPs in the fund a number of times.

Adam Zuckerman
Have you had the opportunity arise - and I imagine that you have, but can't hurt to ask - where you are not only supporting an investment through Powerhouse Ventures, but you've also made the introduction where a contract is signed with one of your partners, and also their venture capital arm supports it as well so it's a true synergy across the board?

Emily Kirsch
I think that has happened once. And I hope it happens many more times. But yes, to get all three, it's like bingo, fingers crossed.

Adam Zuckerman
Have any of the investments that you've had - I asked it already, I know that you only recently started the ventures realm, so it is not necessarily a quick process to turn around - but have you had any successful exits?

Emily Kirsch
We actually did recently. I'm happy you asked. I did not set you up for this question. But we had our first exit in May of this year. And it was a company that we weren't expecting, not because they're not phenomenal, but because they exited after- they were still a seed stage company. But it shows the value of the technology that our portfolio companies are developing. The potential acquirers of these companies, for the most part, are utilities, energy companies, tech companies. And for the energy and utility side, their business model has not changed much in the past 100 years. And yet this wave of disruption and digitization is forcing them to adapt, whether they choose to or not. We backed a company called Ensemble Energy and they were acquired by a global leader in AI called Spark Cognition. Spark Cognition has AI applications across all sectors including energy, but they did not yet have a clean energy practice. Ensemble's value proposition is predictive analytics for renewable asset operations and maintenance, so using sensors and data to inform when turbines might be down, which can lead to, obviously, a lack of output and therefore a lack of revenue generation. Spark Cognition saw this as an opportunity to enter the renewable space in a way that they couldn't do on their own because Ensemble already had relationships and contracts with some of the biggest energy companies in the world. Very excited and proud of Ensemble and grateful for the team's leadership to get them to this exit.

Adam Zuckerman
That's wonderful news, congratulations. And hope you have many more exits in the future that are good for the balance sheet. One of the things that VCs are traditionally known for and benefit from is the opportunity to seal deal flow across their desk that informs their overall decisions, but also opens up opportunity to see areas that might benefit from a bit of focus. You've obviously been around for quite some time now. You're focused on clean energy. Where do you think the industry is going? And what do you think it needs next? What are the opportunities that aren't currently being explored and pursued in the way that you hope that they might be?

Emily Kirsch
Historically, I think people thought of clean tech - now known as climate tech - mostly as about hardware, about thin film solar, and principle batteries, and things that are interesting and fun. But I think the biggest change in the last even five, but certainly 10 years has been the shift from a focus on hardware development to deployment. And at Powerhouse, we believe that in order to address the climate crisis, we have to deploy our most viable market-based solutions today. That means really focusing on proven technology like wind and solar and increasingly battery storage and the electrification of transportation using software fintech to enable and scale that kind of adoption as quickly as possible. At the same time, to address the climate crisis, we absolutely need the kind of hardware innovation that's happening in storage and carbon capture and utilization. But in terms of the timeframe that we have to address the climate crisis, getting existing technology to scale as quickly as possible, that's our focus at Powerhouse Ventures.

Adam Zuckerman
Are there any companies or any countries that you think are doing this much better than others?

Emily Kirsch
Oh, good question. Generally, Europe has been ahead of us, at least in the policy space. Policy and regulation, in our industry, does have an impact. I think generally speaking, Europe, including the corporations that have been in the oil and gas space for a century or more, I think they are starting to make that shift. At least they're doing it faster relative to the US and others. Some of - I mean, actually, all of - our clients other than some of the tech companies are not US-based. They are in Europe, they're in Asia, from a country standpoint. And then from a global collective action standpoint, that's where I think things are getting interesting. Across the world, there are about 550 asset managers with about $50 trillion in AUM that have started to take action on carbon emissions within their portfolios, and this was all kicked off by BlackRock about a year or two ago. And then investors, as you know, investors are pouring in. I think in 2020, $500 billion dollars was invested into decarbonisation broadly despite the pandemic. And then with the infrastructure bill that is being debated now, it would provide $73 trillion of investment into power infrastructure, which would be the single largest investment in clean energy transmission in American history. And then a bunch of corporates have made climate commitments, net-zero commitments or similar commitments, and those corporations represent a combined revenue of $11 trillion. All that to say there's all of this momentum that has never existed before. You combine that with technology that also didn't exist more than 10 years ago - ML and AI and how that can be applied to our industry - I think that's how we get to the kind of scale that we need to really both address the crisis, but then also realize an incredible wealth generating opportunity for those that take that action early.

Adam Zuckerman
And hopefully it's a pie that we can share with many individuals, organizations, companies, and countries around the world. It can't just be a few countries that take home all of the benefit from it. The history of humanity collaborating to address a collective action problem on a global scale is is really challenging.

Emily Kirsch
Especially now with COVID. We have an example of how that doesn't go the way that I think we wish it would.

Adam Zuckerman
Exactly. Fortunately though, you have a wildly popular podcast. It's called "What It Takes" - which is fantastic - featuring interviews with the entrepreneurs building that carbon-free future, which really is that single-most collective action problem globally that we are confronting. Tell us a little bit about the podcast, the history, what you've seen from it over the years and try and frame it in that collective action problem if you can.

Emily Kirsch
Yeah, I love the framing. And thank you for the kind words on the podcast as you know-

Adam Zuckerman
It's amazing, one of my favorites.

Emily Kirsch
Oh, thank you. It's so much fun. I always learn an incredible amount from our guests and to share their stories with the world is one of the greatest joys of Powerhouse's work. But yeah, you're exactly right. "What It Takes" is a monthly podcast that tells the story of founders who are building our carbon-free future. We cover their upbringings, the risks they've taken, their failures, their breakthroughs that are transforming our world. Each episode is pretty personal in nature. We certainly dive into the technology that they've created, but it's really about who they are and what has made them who they are over the course of their life. And we always ask what it takes to build a successful climate tech company. From 2017 to 2021, "What It Takes" was aired on Greentech Media's "The Energy Gang" podcast where we amassed about a million episode downloads and got this reputation in industry. And then in April this year, in 2021, we launched "What It Takes" as an independent podcast with Google as our exclusive launch sponsor. It's still produced by Stephen Lacey, who is the Executive Producer of "The Energy Gang" and interchange that we love that we get to continue to work with him. And in 2021 and beyond, we're going to continue to release new episodes once a month with some of the biggest names in climate tech, including our next episode with the Co-founder and original CEO of Tesla, which I'm really excited about in terms of how it started. Shayle Kann, who's the host of the "Interchange" and myself and a former colleague named Emily Fritze, we were at a wine bar in Oakland - I miss those meetings - and we were talking about thinking of starting more of a like an event series. I would have the opportunity to go to conferences and hear people like Lynn Jurich, the CEO of Sunrun speak. But there were two things about it that didn't quite work for me. One was, those conferences are really expensive. And you can only go if you already work in the industry and your company is going to pay you to go, which means you're probably pretty senior if you're going to go. And then two is that it was limited. The only people could hear it were the people who were there. Between that and the fact that the topic of those conversations at conferences were pretty much exclusively focused on the company and the technology, I thought, well, what if we could tell the stories of people like Lynn, who are just so iconic in our industry. And don't just tell the story of the technology, the company. Tell the story of who she is, how she became who she is, what's the founding story of Sunrun, and make that available, not just to the people in the audience, but then use the podcast format to get the story out to as many people as possible. With Shayle and Emily Fritze and myself at this wine bar in Oakland, came up with the idea for "What It Takes" and our first episode was September 2017, with Dick Swanson, who is the Co-founder and CEO - well, former CEO - of SunPower, one of the most iconic solar companies in the world. That's a little bit about how it started and the history.

Adam Zuckerman
There's always a positive spin in the episodes, because they're real emotional, just truthful engagements and narratives. What's your favorite failure?

Adam Zuckerman
Oof.

Adam Zuckerman
Everybody talks about the solutions. And the great thing is, what's great about the podcast is that you really do delve in. And even though some people may characterize something as a failure, it's not a failure if there's a learning experience that comes from it. Most of them tend to lead to something. So what's that one or two failures that you know what? I kind of love it.

Emily Kirsch
Hmm. I don't know if I loved this failure, but I loved the vulnerability and the honesty. And I think that is also one of the core themes of what it takes that is different than other podcasts is because it's about who someone is. There is inevitably a lot of vulnerability that comes with that and that vulnerability is so relatable. But I think the most profound answer that I heard to that was from Jigar Shah, who now leads the loan guarantee program at DOE, is one of the Co-founders of Generate Capital, was one of the Co-founders of SunEdison. And when I asked Jigar that question, he had a very long pause. And then he said that, when he was starting SunEdison, he was just working constantly to the point of him not being a good partner to his wife and not being present to their relationship in a way that was really destructive. And he feels like- he said that he feels like he's been working since then to amend for the lack of balance that he had in his life at the time. The vulnerability that was required for him to share that I found really humanizing and relatable and appreciated him for sharing it.

Adam Zuckerman
His ability to be candid and just honest is unparalleled by most. We actually had Jigar on the Energy Impact podcast just a few weeks ago.

Emily Kirsch
Fun.

Adam Zuckerman
Yeah. Circling back. All right, Emily, looking forward, what role do you hope Powerhouse plays in the clean energy transition? What technology solutions do you think will play a critical role in decarbonisation. We're wrapping things up.

Emily Kirsch
Let's see. The role that I hope Powerhouse plays- I am so happy to see corporations and governments around the world making these ambitious climate commitments. As you know, the commitments are not the hard part. The hard part is implementation. There are so many entrepreneurs who have built remarkable technology that can help us address the climate crisis. By being the bridge that can bring those two sides of the equation together, that is the role that I hope Powerhouse can continue to play, work with those ambitious corporations and help them find the technologies that they're looking for to meet their goals. That's the role I hope we can play. In terms of the technologies that are of most interest, at least at Powerhouse Ventures, we've been looking at circular supply chains, climate fintech - so looking at risk analysis, modeling climate financing - using AI and geospatial analytics for carbon markets has been a really hot thing in the industry lately. What else... renewable energy and EV marketplaces is something that we're starting to see the rise of and we've invested in. And then lastly, have been really excited recently and just made a bet that's not public yet about fintech and software to enable the proliferation of EV charging infrastructure and maximizing utilization. Those are just some of the things that we're digging into.

Adam Zuckerman
All right, Emily Kirsch, Founder and CEO of Powerhouse. If people want to learn more about the organization, where should we send them online?

Emily Kirsch
Yep, you can go to powerhouse.fund. It's powerhouse dot f-u-n-d and everything's there.

Adam Zuckerman
Now you should also get powerhouse dot f-u-n and then let it redirect.

Emily Kirsch
That is a great idea.

Adam Zuckerman
There you go. Well, Emily, it's so great to have you. We appreciate you joining the Energy Impact podcast. We'll be back with a future episode sometime soon.

Emily Kirsch
Thanks so much, Adam. Really appreciate it.

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