Kristina Johnson argues that energy innovation requires patient capital with 10-15 year investment horizons, unlike the faster VC models in IT and biotech. The energy industry moves slowly and conservatively, so investors need a mix of long-term bets and near-term wins to stay engaged.
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Entrepreneurship in the energy sector is— well, it's critically important and I really encourage it. It doesn't fit exactly into any previous model, if you will, in my view. So you can look at sort of a traditional VC model that's been extremely successful in IT and biotech. And in the energy space, it's harder because as I mentioned before, it takes a long time to develop some of these technologies and a long time to migrate from one energy use to another. So I think that what we need is a new model. Model which is patient capital. It's actually a model that I'm thinking about exploring with the venture that I have where you have an opportunity to have a mix of investments in things that will have a near-term payoff to keep your investors at least happy. Happy investors are a good thing. I'm sure that must be a principle in Epi. At the same time when you have time to invest and then create the kind of change that you can see happen almost immediately in some of the IT revolution. So I think that's different. I think that really you need capital investment more in the 10 to 15 years rather than the 5 to 10 years. And so finding sources of capital that are patient I think is really important as one thing. It's also in some sense a very conservative industry and I think I had the opportunity to sit down several times with Undersecretary Tom Friedman and he made a very good point at the first breakfast we had which is here's the challenge in clean energy. I'm going to give you a light bulb and I want to charge you more for that light bulb. And you say, but Tom, I already got light bulbs, I can already have them. And he says, but I give you this box and in this box you can communicate with anybody anytime, anywhere in the world and it costs you $1,000. This is a true story of the first cell phones, you know, many of you are too young to appreciate that, but they used to be analog, they used to be very big and they used to be very expensive. And so over time, you know, they migrated but they gave you a new functionality you didn't have before. You know, and people bought thousands of them even though they were much more expensive. And that's the challenge we have in energy is we need to provide in order to make a change, and I've been trying to study change movement, what does cause people to change, hence I found my way to Balaji, effectively and to do that kind of investment even though it might be against your economic interest to do that.
