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Juan Muldoon

Partner

Energize Ventures

November 2, 2021
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Ep 49: Juan Muldoon - Partner, Energize Ventures
00:00 / 01:04

Michael Crabb
All right. Hi, everyone. Welcome to the next episode of the Energy Impact podcast. I'm your host, Michael Crabb, and really excited to be joined today by Juan Muldoon, Partner at Energize Ventures. Juan, welcome to the show.

Juan Muldoon
Thank you, Michael, super excited to be here with you.

Michael Crabb
Yeah, excited to talk about what you're seeing. Maybe before we dive into all that you're working on now, tell us a little bit about yourself, where you grow up, how you got to where you are today?

Juan Muldoon
Sure. It's been a long and winding road for sure. Brief history of me, I was actually born in Mexico City and lived around all over the world, lived in Mexico, lived in Santiago in Chile. Eventually moved up to Dallas, Texas then went to college at the University of Notre Dame. Started my career in finance, actually worked at JP Morgan in New York City for a number of years where I got a chance to see really closely how ecosystems were developing, primarily around energy infrastructure. Sustainability at that point was sort of a budding theme and a socially responsible investment was sort of this thing that people wanted to be involved with, but there was no real rhyme or reason as to what that meant.

Michael Crabb
What year- not to date you, but what year was this, for context?

Juan Muldoon
It would have been in the early to mid-2000s, so I kind of lived the financial crisis up close. And I was lucky to be in an organization that was- it felt like the whole street was burning, but there were a couple of buildings that were still standing up and JP Morgan was definitely one of them. So I got a chance to be there from the beginning. And I had honestly a great career there, awesome talent in the space. But one of the things that I realized was, the closer you are to the investment banking or that kind of high finance world, you're not really doing much investing. And it was really hard for me to have an impact, both in the portfolios that we were managing and on the companies that we were trying to put out theses around. And so I knew that I wanted to get closer to the earlier side of investing - stay in the buy side, but get closer to company formation, real business strategy - where you can be much more impactful as an investor on the company's trajectories, in a way that I wasn't really going to be able to do in that kind of prior life. But it gave me a really good understanding of, obviously, the financial markets and what investments are like, and specifically what institutional investors look for as we try to generate alpha. So after that, moved back to Chicago-

Michael Crabb
Hold on, before- I'm not gonna let you off that easy. So in finance, you travel around a lot. Was finance something that you just saw as sort of a global constant or just something to do? I mean, walk us through that process.

Juan Muldoon
When I went to school- it's funny. When I was an undergrad at Notre Dame, my family wanted me to study business and, perhaps because of that, I did not want to study business. So I studied economics. And I was really more of a micro economics sort of geek. I really loved supply and demand dynamics and what that meant for companies and for entire countries in terms of capital flows. And it was actually a really good transition from that to finance at JPMorgan where I got to kind of see that up close and see how the financial system operated beyond the kind of Excel spreadsheets and models that we were taught at school. So yeah, it definitely tapped into that more analytical side of my brain. But, I mean, I didn't really have a whole lot of background around marketing or business strategy or IP or anything like that. I took a couple of courses in undergrad, but didn't really have a huge- a lot of experience there. I was really more of a numbers guy. So actually, because of that, I wanted to go back to school, because I knew that I wanted to be kind of earlier in the development cycle working with companies and I wanted to be as valuable as possible. And I knew that I still had a couple of big open holes or lagoons that I wanted to be able to fill. So I enrolled at the University of Chicago Booth School of Business and got my MBA there. And that was really an amazing experience for me, because it gave me a chance to do two things: number one, to fill some of those gaps that I had really to learn some of the other areas of business that that I hadn't touched so directly, but number two - and Booth is, I think, pretty unique in this, just kind of gives you the keys to your own future. And they say, Listen, you need to graduate with "x" number of courses across "x" number of functions. But after that, you kind of get to pick your own adventure in terms of how you want to set your schedule, where you want to prioritize, where you want to load, or take a heavier load, or maybe take a lighter load. And that gave me the opportunity to, while I was in business school, sort of scratch and bite my way through the investment landscape in Chicago, because you get kind of sucked into this pervasive and sort of negative loop where, if you're trying to get into venture and you don't have direct venture experience or you don't have operating experience, it's sort of a requisite, right? And so I might have had a really good point of view or I might have had obviously all the abilities required, but if you don't have experience, you can't get that experience. And so, my time at Booth, I kind of focused on, Well, I'm going to get this experience. So I worked with a family office in town. I worked with an accelerator. I actually did a lot of work for a private equity fund, worked one of my summers for another venture capital firm in Mexico where I grew up. And so I got a chance to see across the entire early investment sort of capital where I would be a better fit. One of the things that I realized was, I didn't want to do something that was too late in the cycle where the impact that you were having was really more around balance sheet optimization, more kind of later stage PE or infrastructure. And I didn't want to go so early in the cycle where there wasn't a whole lot that you could do without taking on a bunch of technical risk. You couldn't really move the needle there either. So I knew that I wanted to be in this sort of middle stage to earlier stage part of the spectrum. And I got really lucky to begin to work for an accelerator here in town in Chicago called the Clean Energy Trust, which is an early stage sort of incubation engine. I think it's one of the best kept secrets in the Midwest. And I helped the team there think about different types of investment strategies, different types of structures. At that point, we were starting to pivot from only making grants to making sort of grants but with the expectation for return so that we could create a profile that was self-sustaining, or at least would help give back to the ecosystem as a whole.

Michael Crabb
And then you're sort of seeing that seed stage, then? It was exposure to early stage investing, but ultimately not really where you wanted to end.

Juan Muldoon
Yeah, so that was definitely earlier than where I thought I would be valuable. And the other thing about Clean Energy Trust is, a lot of the things that came through were highly technical in nature. It was a better battery chemistry or a more sophisticated membrane that would help with flow of energy and that really- I'm not an engineer. And so it wasn't a- it wasn't where I would maybe be the most impactful or have the most help. But that allowed me to cement a couple of relationships within the energy ecosystem in Chicago. And that was a place that I knew that I wanted to dedicate more of my career to, because you start to think, what's not going to change in 30 years? Well, how we get our electricity is probably going to change, but the fact that we do and the fact that we're acquiring energy is probably not going to change. And the closer that you start to see that, I could see a whole bunch of changes going through that industry. Everything from literally how is power produced and how is it carried to different parts of the world, all the way through to how is it consumed? And how do people think about their own operating efficiency within their own businesses or within their own behavior? And so I just thought that that was a super exciting intersection of things that were changing very, very quickly on the renewable landscape and the more and more digital stuff that was coming in, digital solutions that were coming into that ecosystem along with this obviously socially important piece of infrastructure, the energy landscape that was not going to change very much or it's not going to certainly go away.

Michael Crabb
So this is interesting, because there's- I feel like there are themes when you talk to people in this industry. And almost all of them- many of them start from that sort of fundamental renewable angle or sort of social good. And then they find their niche in the capital stack. But it seems like you're kind of coming at it from the other direction, right? And would it be fair to describe you more as a generalist? You identified the age of the company that you wanted to be an investor in and sort of fell into energy and industrial decarbonisation?

Juan Muldoon
Yeah, I think that's fair. I wouldn't say I fell into it. I think that I knew that I wanted to dedicate my life to something that was going to be sort of socially meaningful and this was the best way that I could find. And certainly had some awesome peers and mentors along the way to help me make those decisions. But yeah, I mean, at the end of the day, what I was looking for was something that would bring- be a really good fit for the things that maybe I can bring to the table. And also an area of the investing landscape that I just thought was exciting enough to say this is going to be a 30 year run or 40 year run. Let's do it in this little corner.

Michael Crabb
Definitely. Yeah. And I guess I should choose my words more carefully. I don't think any Booth alum has ever fallen into anything, anywhere, right? It's very deliberate. Well, can we unpack a little bit your comment- this is an interesting one that we see, too, this sort of digital solutions versus sort of hardware solutions. And I don't know, maybe elaborate on, as an investor you're never an expert in everything. You just- your ability to wrap your arms around the technical stuff was just so far off the fairway that you just didn't feel comfortable with that?

Juan Muldoon
It wasn't just that, it wasn't just that. It was actually more- maybe a different approach where if you look at the venture returns and the energy landscape for the last 20 or 30 years - certainly the first kind of clean tech 1.0 wave - it was broadly disappointing for a lot of different people that put a bunch of capital in the space. Big names that said, This is going to be a noble investment cause and we must do this and here we are. And we plowed all of this capital into companies that eventually were- I mean, most of them were hardware companies or hard science, hard tech kind of companies that ended up being commoditized or that ended up being unsuccessful, because there are a lot of technical complexities in these types of endeavors. And I think part of what went wrong in that first kind of wave of clean tech was that there was a mismatch between the type of capital and the return that you expect with this type of venture capital and the opportunity. The reality is that, while these markets are huge, they don't move very, very quickly. They don't move quickly enough, perhaps on average, for most of the investments that you make in the hardware side to be able to have these 50% plus type of compounded annual growth rates over 10 or 15 years. And for you to be able to harvest that within one fund's life, it's just a very difficult proposition to make, or at least we felt so. And then in addition to that, you have all of this infrastructure. Now all of the renewable infrastructure that's out there is now connected. Every wind turbine that you drive by has a little computer in the cell and is full of sensors. Every energy company today, in addition to being an energy producer or whatever they might do for their operations, also has this incredibly complex digital backbone that they are using to be able to be more efficient in their own operations. Those types of companies, that digital backbone company or that digital application layer company, has a completely different growth rate, has a completely different unit economics. And that to us felt like a much more sustainable sort of growth model where you could have high gross margins, high growth, and much, much less capital intensity, which tend to make a much better recipe for success within an industry that's already complicated.

Michael Crabb
All software tastes like chicken\, right?

Juan Muldoon
That's right.

Michael Crabb
That's super interesting. And so you said "we" felt. Was there a discussion around Energize Ventures itself as you've raised some different funds and you sort of are focusing on slightly different areas of company growth? Had there been discussion of sort of the hard tech versus software or-

Juan Muldoon
Yeah. What I was referring to was really the early stage ideation of Energize, which was when we were still kind of putting things together on the back of a napkin. And really, there was Michael Polsky, who was our first LP and a member of our GP, a very successful entrepreneur in the energy world. Also a big presence in Chicago, through both the Clean Energy Trust and Booth, so we had a bunch of connections and the early partners at Energize. And that was a huge, I think, lightbulb moment for us. To hear from Michael, who has been around a number of energy transitions, to hear from him say, Listen, my company - Invenergy at the time - which is one of the largest renewable power developers is now using more and more software. Our budget for digital initiatives is growing. That's a light bulb moment for us to say, Okay, wow, there's a pain point here. There are several different pain points here, from how you site a project, to how you design that same project, to how you finance it, how you trade, all of these different pieces of the sort of chain. A bunch of them are starting to be to be digitized. You could actually help those operations with better software. And you could keep reducing that cost of capital, keep reducing all of the hard and the soft costs that are associated with the energy transition. So if you're able to do that with digital solutions - some of which come from outside the energy industry - and if you're able to help accelerate that transition, that's really where the thesis is born. It's these technologies that are coming to market now have a massive potential to make real big impact in these incredibly large and complex industries. And we don't have to start from scratch. We don't have to take 30 years to have a solution that is workable. We don't have to have these several year long pilots to see if the technology is going to work. We know that it does. And we can see the impacts of it up close, in a very, very short amount of time.

Michael Crabb
And so that was- you probably had a real competitive head start right in 2016- 2015, 2016. I think that was probably just before a lot of these utilities were really embracing digitization. Have you seen an increase in competition around this space as sort of the more generalist funds have started to attack a market that's maybe more willing to change or willing to adopt?

Juan Muldoon
For sure. I think, two points. Number one, yes, we were probably slightly ahead of where others saw the puck, but just because we wanted to focus on this digital side. And I think, traditionally, clean tech or climate tech investments, there's always been a mix of hardware and software. And I can talk a little bit about how we see that hardware component, because it does play a role. But yeah, I think we were among the early sort of adopters of that idea. And today, I mean, for better and for worse, there's a bunch more capital in the ecosystem. We see- definitely we see the generalists that have that have come into the space. In addition to that, there are a bunch of new energy or industry specific firms that are raising capital across early stage all the way to growth that are seeing some of the same things that we're seeing. To tell you the truth, we love that. I think that it's too complicated issue to have sharp elbows around all the time. And we love to syndicate rounds. We love to co-lead. We love to play really well with the ecosystem, both with folks that are very specifically focused on sort of this energy or industrial digitization theme, as well as with general or generalist investors that can bring a different set of resources to the table. So yes, but the party has gotten a little bit more crowded, for sure.

Michael Crabb
I'd love to go two directions and you can pick which we go first. I'd love to hear your comments, software versus hardware, and maybe how you see those playing together and evolving. And perhaps also another opportunity to maybe talk about, I think your LP base is pretty unique and strategic in this space and sort of always been that way. So maybe, whichever of those you want to attack first and we'll do the other one afterwards.

Juan Muldoon
Let's start with the hardware and software since I brought it up and then we can circle back on the LPs. I mean, look - at the end of the day, it's hard to make any big impact in energy and move electrons without hardware. Oftentimes, they are a necessary component or sometimes a necessary evil to doing things like that. The way that we see it within our thesis is we want to focus on companies where the value and the unit economics profile is driven by that digital piece. And sometimes there's a hardware component to it, for sure. I'll give you a couple of examples. Volta - which is a really exciting company, just went through a SPAC process a couple of months ago, so there's not much that I can talk about -but initially the lightbulb moment for them - obviously, they have infrastructure, it's electric vehicle infrastructure companies, so lots of hardware there - but the business model that they have is all driven by digital scalability. It's this advertising based revenue model, which completely turned some of the dynamics on their head and enabled much more profitability and much more scalability. At least we saw. That's Volta. I'll give you another example.

Michael Crabb
Still capital intensive? I mean, it's just more about the scalability of the revenue side.

Juan Muldoon
That's right. That's right. Again, we look at the unit economic profile. Is the value there coming more from scalability that is enabled by software or some software business model innovation - and Volta definitely fits that - or is it not? I'll give you another example. We have a company in our portfolio called Nozomi Networks. They are an industrial control systems cybersecurity solution. Super important for our connected digital, renewable infrastructure, to be prepared well for growing and more complex cyber security risks. Well, there's a blade, there's like a legit hardware, networking hardware, that needs to be installed and needs to be plugged into the operating networks of their clients. There's a hardware there. Where do they get their sort of business unit economics from? It's not just from the hardware. They're not just selling the hardware. There's a whole bunch of- their products, really the software and the intelligence that lives on top of that, but sometimes you need hardware to deliver that. And so we're okay with those. It's the infrastructure base, or super capital intensive, or things that are- whose IP is related more to the hardware or the underlying technical science? Those are not as good fits for our thesis.

Michael Crabb
And so do you see- you have this sort of deep network in the space. I'm sure you see the full gambit. Do you have other partners or other capital providers or LPs that may have other investments where you can say, Oh, here's a more hardware-focused or project-based business, this might fit well with them. And you sort of pass them on?

Juan Muldoon
For sure. And if anything, sometimes, it's frustrating to have such a defined thesis, because we know that there are some really fantastic companies out there with some really incredible CEOs that- they just don't fit our profile. And so we have to be disciplined to stick to our guns. But for sure, I mean, everything from corporate venture arms all the way to other investors, the ones that you mentioned, some generalists, some more sector specific ones. Many of them we've co invested with.

Michael Crabb
Sure. Yeah, it's a funny ecosystem, because everyone's sort of competing, but we're all sort of playing on the same team.

Juan Muldoon
That's right. Yeah.

Michael Crabb
Which makes it- I don't know, it kind of makes it interesting and fun, I think. Well, great. Yeah. Love that. Love that color. Maybe talk a little bit about- maybe it's a good transition into the LP side of things very sort of industry-focused core group of investors or original group of investors and maybe talk about the recent fundraise, as well, on top of that.

Juan Muldoon
Sure. Yeah. So- actually, let me pick up a thread kind of where we left it off, which was where we were coming together with the Energize thesis. A very important part of what we wanted to do differently and what we thought the ecosystem was missing was, there are a lot of stakeholders in this energy transition - everything from the developers that are building out these projects, to the manufacturers that are actually providing the infrastructure needs, to the financing counterparties, to the utilities that obviously have a very important role to play. And what we wanted to do was to represent sort of a united front and a group of capital that supported really the ecosystem and represented a lot of different players in the value chain. Very early on, when we were raising our first fund, we targeted a couple of other corporate investors to join us. So our first fund was anchored by a couple of corporates. I can name a few: General Electric Schneider Electric, Wisconsin Energy, a big utility in the Midwest. So we had a really good representation from other folks around the sort of value chain of this energy transition. That's about a third of our capital base. In addition to that, we have the traditional institutional investors, so endowments, foundations, fund to funds, and then about another third of our capital came from family offices and other investors that saw the impact, the underlying impact, that unlocking these innovations was going to have in the space. So that's about-

Michael Crabb
Were those family investors, did they have the sort of energy transition thesis already and saw you guys as sort of an industry execution arm? Or was there some pitching? This is 2015, 2016?

Juan Muldoon
Yeah, 2015, 2016 was when we were launching.

Michael Crabb
How much of that did you have to sort of show them where the puck was going?

Juan Muldoon
It was a fair mix. Although I'll tell you, it's really hard to raise a first time fund. I think that goes without saying. We were lucky to have some awesome investors along that believed in the mission as much as we did. But, I mean, I can tell you anecdotally, if you're having to pitch- or if we were having to pitch somebody that maybe didn't understand or didn't do a whole lot of venture, maybe didn't understand or do a whole lot of energy investments, and it's a first time fund, it's like, one of those is usually enough to disqualify an investment. But no, I mean, going back to our capital base, we had a mix. We had some folks for whom this energy transition was a concept that they had thought about. Maybe they weren't as close to operations, but they believed the renewable energy train had already left the station the same way we did. And there were some that were actually incredible, because they had their own operating companies. And so they saw some of their own- some of the same challenges that we were talking about in terms of- listen, manufacturing is becoming more digital. They could say, Yeah, we believe that because we own some manufacturing facilities. And we could tell you, Yes, this is the case, right. But every single one of our LPs in fund one - and I think across the entire Energize platform - really appreciates and really believes that these changes are happening and that we can be a force for good by bringing more and more of this sort of digital technology to help unlock more value.

Michael Crabb
Yeah, super interesting. Well, that's a good transition, too, then. What are you- what are some of the specific trends you're seeing now? And how do you see that evolving? Where are you spending a lot of your time as you look forward?

Juan Muldoon
Yeah. Great question. We actually just announced our second fund, which we were able to raise 330 million from a similar set of LPs. Actually, most of our fund one LPs came back, which is an awesome sort of show of pride. And one of the big themes that we keep hammering on is that this transition, which five or six years ago was not obvious, is now becoming more and more obvious. It's now becoming bigger. The markets are expanding faster and bigger than we thought, even at entry. And the outcomes that have been enabled are also sort of bigger and more exciting. That's one big overlying sort of thesis. Within that, I think there's a lot of work to do still. There are a lot of soft costs that are written in how we operate complex industries, like energy and power and manufacturing and construction and transportation and mobility. There are a lot of soft costs that are sort of perfect candidates to be removed with good software. And almost every single one of those industries that I mentioned, from power to manufacturing to transportation and beyond, are going through their own reckoning with a new set of assets. In mobility, for example, obviously we have the electrification of transportation. It's another trend that has already left the station. It's just going to keep accelerating. And it's just a matter of how fast do we get to a place where the internal combustion engine is the thing of the past? That didn't really used to be the case ten years ago. We had Tesla and maybe you saw a few of them riding around and in some parts of some neighborhoods, but that's no longer the case. In manufacturing, we see more and more companies that are paying close attention to how they source, what they source, how they produce, what they produce, how energy intensive are their own operations. Same thing with construction. Now, the leading buildings in the world are in addition to being incredibly connected - talk about connected asset base - they're also at a significantly lower carbon footprint over the life of a building than they used to be. And then in power and renewables we've kind of danced around the issue. But in many parts of the world renewable energy is the lowest costs possible. It's no longer a partisan issue or something that we could say, Ah, well it only works if you do this and this and this and squint your eyes and you assume all these subsidies. That's no longer the case. And so we think that it's still very, very early innings across a couple of these different industries that share some similar pain points and that share some- many times we have companies in our portfolio that conserve a whole bunch of these differences.

Michael Crabb
I know you said you're a micro guy, but I'll ask you a macro question. It feels to me that you've got all this electrification of everything. And I know wind and solar in many parts of the world are cost competitive, but they're not a silver bullet by any means. And even with all the pace and all of the velocity of capital going into those projects, I don't know. I mean, I don't have the numbers right off the top of my head. But we're still way off from really decarbonizing in a meaningful way. How do you see- does it just accelerate so much faster over the next five or 10 years? Are there other dominoes that have to fall for us to really make progress towards sort of this global target?

Juan Muldoon
I think that's a great question. And if I had the answer to that, you and I wouldn't be enjoying this podcast as much as we are. So on electrify everything, I have to give a hat tip to my colleague, Tyler, who has written extensively about this and has a great blog, a series of blog posts that are coming out. But I mean, you're right. We're scratching the surface on where we could be. The way that I like to frame it is, this is a- it's a transition. It's not a transformation. Okay. It's not something that's going to happen overnight. We don't just flip a switch on trillions of- literally trillions of dollars of infrastructure that have been deployed across the entire world for the last 100 years. It's going to take us time. And if we are so impatient to say, We don't have all of- No, we have to say, This is going to be- this is going to take some time. Now, I hope it doesn't take us 100 years, because the world is going to be very different. But I do think that it's going to take time for all the those different stakeholders to catch up and to say, Okay, we can do this. Certainly transportation has a huge impact to our carbon emissions footprint. Buildings are a huge part of the carbon emissions footprint. Agriculture, right? I mean, these are very complex systems. Moving one lever over here doesn't necessarily always have the same magnitude of impact that we might expect. These are very, very complicated systems. But this is part of the reason that we believe what we're doing is so important. If you really want to accelerate this transition, you want to be able to bring the best-in-class technology to make that happen as quickly and as efficiently as possible. And the best way to ensure that's going to happen, in our point of view, is to ensure the commercial success of those companies, to have good technology, excellent teams, good, fundamentally sound business models in industries that are adopting this, where budgets are growing, where you can build real, lasting, enduring companies that are going to be the next generation of huge companies in the energy and infrastructure environment. We believe that that's what we're doing. And if you look at the Energize portfolio now and if you look at the Energize portfolio in 10 years, I hope that that's always the case.

Michael Crabb
Let me ask you about a couple of business models that I think are are becoming more prevalent. There's the fintech sort of distributed scale, reducing friction around financing. So I'm curious as to what you've seen there. And then this sort of energy-as-a-service, which- I think sometimes people use those two business models interchangeably, but I'm not so sure that- one is enabling capital flows. And the other is, I think, directly supplying capital flows. But have you seen those types of businesses?

Juan Muldoon
Yeah, we have. Great questions. And actually two areas where we've spent a lot of time. On the on the flow of capital side, I actually think that this is one of the biggest opportunities of the energy transition. Because if you follow the dollar, from underwriting all the way to construction and beyond, again, there are pervasive soft costs, because every project is a little bit nuanced. Every financing counterparty is a little bit nuanced. Every insurance counterparty is a little bit nuanced. And it's difficult to get things to scale. And it's also sometimes difficult to get some of the stakeholders there to agree on standards and transparency. You might have the financing counterparty that doesn't want to share their model, because that's their secret sauce. Right? So how do you get around that? I do believe that a lot of the capital that's out there that should be put to use for this renewable transition just has so many friction points before it gets to its end result. And I think that there are some exciting companies that are that are doing that, primarily using data to say, Listen, if I have better information about how those projects are managed, not just who the headline counterparty is, but where they're cited, what type of assets they're using, what are the real cash flows that I can underwrite? I think that there's something exciting there. Because at the end of the day, you can use data and software to reduce exposure to specific risks that you understand. That should flow to lower cost of capital, lower loss ratios, and overall better financing for the projects at large. I think that there are some interesting themes and companies out there that we've had on our radar for some time. We haven't made an investment in that space, primarily, because most of the things that we see that we've been excited about are just a click early. But that's one that we're tracking very, very closely. And then on the second, on the energy-as-a-service, I think that's really broad, right? If we kind of take that down even further to thinking about, behaviorally, how people think about their own energy consumption, that's always been a challenge for me, to tell you the truth. Because, unfortunately - and I can say this on this podcast - most of the people that are out there don't think that much about their energy consumption. You and I are probably on the one or two standard deviations away from people that actually care. I- my team makes fun of me. I'm crazy about my Nest thermostat reading and always trying to get more leafs out there. But most people think about their energy consumption less than 10 minutes a year. And most of the time, if you're in Texas, it's in August when you get that huge bill-

Michael Crabb
Or February.

Juan Muldoon
Or February. Or when you're moving, when you're buying a house or something like that. Behaviorally - and maybe this is getting back to my micro roots - I think that the key to that is actually to take the person out of the equation. Can you make it so that the starting point, the default, the nudge is more energy efficient than the opposite? Because people won't change. How can we almost use behavioral dynamics to our advantage? And say, let's just make this easy, right? What's the easy button for energy efficiency? Sometimes there is one. Nest is a great example. You can set it and forget it and say great. And even that has its kinks. But there are some models out there, there are some companies out there that I think are working on some more exciting pieces around that.

Michael Crabb
And is there- we could spend another hour on this, because I love talking about the demand side of this equation. Don't worry, I won't eat all of your day. But do you think there's more meat on the bone for that sort of easy button concept? One of the things that I wonder is, is a lot of that low hanging fruit- like the people that cared about energy efficiency or demand, probably have already started making some life choices. And the people that don't probably aren't going to be convinced because of some fancy Facebook ad. It's just too small a part of the customer wallet, I think. How do we kind of keep that ball rolling as a society?

Juan Muldoon
That's a great question. And I think, again, it comes down to alignment of incentives. Will people change their behavior for $7 off their electric bill? No, probably not. So somewhere between $7 off your electric bill and, I don't know, some rebate on a new electric car, people will change. I really do think so. I think that there is a break point out there. But it's tough, because you've got different pricing dynamics, different ecosystems. Again, energy is complicated. It's really complex. There are a lot of stakeholders. There are a lot of regulations. There are a lot of complexities. There are a lot of things that will make something a slam dunk in California that will doom it as a business model in Florida or in Illinois or in Texas, and it might have nothing to do with people, with the end consumer. It might be the utility, or it might be the regulator, it could be something completely different. And I think that that sort of jigsaw nature of our energy infrastructure makes some of those energy demand concepts very difficult. Because at the end of the day, the key to success there tends to be scale. And it's hard to get scale if you have to fight it out in the trenches across every single jurisdiction, over and over. Now, there are some companies that are not big companies that I think are doing some of that successfully. But again, going back to your earlier question, this is not a transformation. This is a transition. It is going to take many, many years. It is going to take maybe even decades. And where we like to focus our time at Energize is, what are the pieces that are going to be able to make those changes really happen within some reasonable timeline for us as investors? And that's- yeah, I wish we had more time, because I think that there's a lot more to do.

Michael Crabb
Yeah, the timeline question for us is really pervasive here, right? Because what's the customer issue? Is it the present value of that demand? The cost of that is so far in the future, it's not we're changing. And the investment, same thing. How do we- how do you find businesses that hit the five to 10 year investment timeline for these funds? It's super interesting.

Juan Muldoon
We think software has something to do with it.

Michael Crabb
Well, yeah. Has to, right? So you mentioned a bunch of states as you're listing the different jurisdictions. But this is also- this is really a global issue. I mean, it's not just the 50 or however many RTOs we have in the States or whatever. This is really a global scale question. And that induces a whole other set of risks aside from just the regulatory and nimbyism that I think you were referring to. Do you guys focus on companies that are that are primarily focused in the US or do you do some global-

Juan Muldoon
We make global investments. And some of our companies are global in nature. So we've made three investments in Europe-based or Europe-started companies. Europe is a really interesting ecosystem, because, as complex as our energy landscape is, there's I think is a couple of years ahead. It's more expensive over there and so there are things that work just from an economics perspective over there before they will here. And just socially, I think they're probably more conscious of some of these issues. And that behavioral change threshold is a little bit different than certain parts of my state. So yeah, we've made a couple of investments in Europe. We think that these are, to your point, completely global issues. And many of our portfolio companies, just to name a few - Drone Deploy, I mentioned Nozomi. There are a couple of others - Beekeeper - that have a global customer base. At the end of the day, the problems that we are trying to help solve are not defined by a jurisdiction. They're not defined by policy. They're not defined by politics. They're defined by energy is complicated and it's just as complicated here as it is in some other parts.

Michael Crabb
That's a great line. And it's true, right? There are just so many interrelated parts to the whole supply chain and execution of generating assets and transportation and delivery. What- we're running a little close on time. Anything else that we haven't talked about, that you want to get in for the listeners?

Juan Muldoon
Well, I mean, a lot of things we could have covered. But I think overall, just the fact that we're having this conversation is exciting, because I see the talent that has come into the space. I see the capital that has come into the space, the entrepreneurs that have said, Hey, you know what, I've had a great success in tech, or I've had a great career in finance or whatever it might be, I really want my next act to be working on some of these issues. I think that's super exciting. And if you think about the growth of these markets and the revenue that I've mentioned before, those are great, but they're kind of lagging indicators of where we are. I think for a lot of our work, the leading indicator is that talent piece. And I mean, I can tell you, at least for the last several years that we've been doing this, that question is probably in one of the most exciting places that it's been in recent history. So thank you and thank you for what you do in this ecosystem. You're kind of trying to stir that pot, so this is exciting.

Michael Crabb
Really great having you on and looking forward to hearing future investments in the future.

Juan Muldoon
Well, stay tuned.

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