The following is an excerpt from a talk by Managing Partner Tom Chi during “The Economics of Climate Tech: Building Resilient, Scalable, and Sustainable Startups.”
Portions were covered by Heatmap News as part of their San Francisco Climate Week recap article.
This is a good moment to reflect. Obviously there's a lot happening in the world right now, and when the shift happened, we thought, it’s a good thing that we were in the business side of climate so much before everybody.
When we started our firm, a lot of people said that we're moving to the green economy, and there's going to be all these incentives. They would brag about the green premiums they could charge. And we said, we're not touching green premiums with a 50-foot pole. In fact, parity is not a thing either, right? Parity dies because of capex inertia.
And now we've seen other people's models shift and slowly migrate over to more of our approach, the one that works for all businesses. It has nothing to do with climate intrinsically. Now that said, we're pointing it at climate, and if you succeed at being profitable, it'll work no matter where you point it.
But where did that philosophy come from?
Before At One, I was teaching innovation around the world including at a Hong Kong–based supply chain management company that has 8,000 primary factories and 11,000 secondary factories in their network.
One of their accounts was a women’s apparel brand that wanted to clean up the labor of the supply chain, which led me to these environments where I got to see how clothes are made. Now at that time, the workers were paid about $0.02 cents per seam. It adds up to a salary that is on the order of $50 to $80 per month. That's what the people that make your clothes are being paid.
Now you know what's cheaper than two cents per seam? Zero cents. And that's where child slave labor comes in.
Because the way that companies win these contracts is they actually promise delivery at a little bit high for what they could normally deliver, and they'll bid on multiple contracts knowing that they're not going to get all of them. But in the bad situation, which sounds like a good situation, where they close two accounts when they expected to only close one, they don't have enough labor.
So all of a sudden they need some help. Then it basically spiders out to the secondary level, which in many cases ends up being orphaned children and a bunch of other people that got rounded up to do the work. And you know what? Zero cents is cheaper than two cents.
Now, do I think that this retail brand was excited about child slave labor? Of course not. They were working with the manufacturing company to avoid this common scenario.
But seeing that type of tragedy also made something wildly clear to me, which is that capitalism is so intense that people, for $0.02, will accept child labor as part of the system.
And it struck me that if unit economics, a two-cent difference, was so strong, you would give up everything in your morals for it, what if instead of behind that door you had child slave labor, what if behind the door of the lower unit economics you had the greenest best technology for the world?
Wouldn't people destroy themselves just as hard to get that? And the answer is yes, they will. We live in a system where that unit economic push drives you so hard, you’ll do anything.
So, if we created a venture firm where, yes, it's all about the planet, but literally everything is not just the less expensive way to do it, but a radically less expensive, empowered by breakthrough technology, that could lead to just as rampant adoption, a rampant pull.
There must be an understanding that this is the mechanism of global psychology at this moment. We have to work with the forces that exist, but we don't think these are the forces that we should work with forever.
But instead of getting frustrated or enraged and thinking that we should “tear it all down” and start fresh, what if we took a different approach? Rather than trying to destroy late -stage capitalism, what if we composted it?
What if there's nutrients in every little nook and cranny? But the thing that was broken is the mindset with which we use those nutrients. We aligned them in a way that was ultimately choking and poisonous, you know both to the biosphere but even to our own hearts.
It is in moments of tragedy that you learn. If you break your leg, you can see your bone for a second – and you learn something about the structure of your leg. I know that sounds terrible, but these lessons are hard to see, most of the time. Society is smoothed over, and it looks clean and it's easy to interface in all the ways that society is created for you to interface.
But in those moments when you witness child slave labor, in those moments where major tragedy happens, you can see the true structure of things – both the good and the bad.
We see this occur when natural disasters strike communities. Some years ago I lost my house to a volcanic eruption. Within the three weeks it started, it wiped out a third of the houses in our entire county, so a third of the entire population of our county was displaced.
Now, what happens in those moments? What do you discover about yourself and your community in those moments?
Even though we didn't know each other that well at the beginning, we understood that we deeply cared and shared things that mattered at the greater level than whether our house was destroyed, whether we had a place, whether we had a place to sleep that night, whether we had access to clean water that day, whether we had childcare or a safe place for our pets.
That shift for the community sounds like a million miles away from how this society is working right now. When the tragedy revealed these things to us, we turned into this other state in like two days.
It went from one day of total confusion: What are we doing? Who's got resources? What's going on? It's all falling apart. I don't have power. Do you guys have power? Oh, how do we get over there? Oh, my house might be destroyed. It's still coming. Should we evacuate?
It turned from that to, I got you.
Over here, these people are organizing child care. And over here, these people are organizing county resources. And over here, people are organizing access to water.
Understand that this time period in history may bring us tragedy after tragedy. But it's really in those moments that we're going to understand the deep underlying structure of the world that we've built and also the character of who we are.
And it's in that time period that we are going to step up and become what we are meant to be, or not at all.
.png)
