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Episode 10: Brook Porter

Jon Powers sits down this week with Brook Porter, Partner, and Co-Founder of G2VP, as they discuss his career working for some of Silicon Valley’s most iconic funds at Kleiner Perkins before launching his own fund, and what he sees on the horizon for green energy markets.

Brook Porter joined Kleiner Perkins Caufield & Byers in 2010 and started G2VP in 2016. He seeks multi-stage investments at the nexus of sustainability and technology innovation, with a focus on transportation, agriculture, and distributed generation. Brook is named on multiple U.S. and international patents in the field of renewable energy. He holds a B.S. in Chemical Engineering from the University of California, Berkley.

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Transcript

Jon Powers:

Welcome to the Experts Only podcast, sponsored by CleanCapital, where we explore the intersection of energy, innovation, and finance. Our host is CleanCapital’s co-founder and former federal chief sustainability officer Jon Powers. Learn how CleanCapital is revolutionizing clean energy finance, and find more episodes at cleancapital.com, iTunes, or wherever you get your podcasts. If you like what you hear, be sure to subscribe and leave us a five star review.

Jon Powers:

Welcome to CleanCapital’s Experts Only podcast. My name’s Jon Powers. Really looking forward to our conversation today with Brook Porter, a partner at G2 Venture Partners. I knew Brooke when he was at Kleiner Perkins, and he’s really had a unique seat in Silicon Valley, watching the clean energy market develop and change over time. Today, we’ll be exploring, I think, some of the themes throughout Brooke’s life, who’s gone from being an entrepreneur to an investor, looking at the impact of invention to the market, and how some of the market and technology curves are really beginning to come together in a very unique way to help transform the market. The conversation will explore some of the market issues, but also what investors are looking for in that space. Brook, thank you so much for joining us here at CleanCapital’s Experts Only podcast. Looking forward to our conversation today.

Brook Porter:

Great. Thanks, Jon. It’s nice to be here.

Jon Powers:

I want to start off talking a little bit about your personal journey in this space, and then we’ll get into some of the really innovative stuff you’ve been working on and actually have worked on in the past. But you’ve got quite a journey, both as an entrepreneur and then, later on, as an investor working across the intersection of energy, innovation, and finance. So tell us about your personal story. How did you end up working in this space, working for some of Silicon Valley’s most iconic funds like Kleiner Perkins, before launching your new fund?

Brook Porter:

Yeah, so maybe I’ll start from the early days. I graduated from UC Berkeley as a chemical engineer in the late 90s, during the dot-com boom. I always loved IT, but for me, it lacked mission. Unfortunately, I wasn’t insightful enough to see the transformative power of democratizing information, and instead I was drawn to energy and environmental impact, which I think came from my upbringing. I had a couple of large influences in my life, from my grandfather on my mother’s side and from my dad. But at the time, no one in Silicon Valley was really interested in energy, so I had to look elsewhere. Then, I got inspired by electrification of transportation early on, actually in high school. I wrote a paper in, I think it was probably 1993 or so, about using nickel-metal hydride batteries and the GM Impact, which was using lead-acid batteries at the time.

Jon Powers:

Wow. Yeah.

Brook Porter:

And I thought it was pretty neat. It was sort of a high school, college English course, and I chose to write it on a technical subject. And what I found really interesting is that, a couple of years later, that car became the EV1, which was the iconic vehicle that was referred to in the movie “Who Killed the Electric Car?”. And so that was sort of inspiring. I was like, “Hey, I actually talked about that.”

Jon Powers:

“Maybe they read my paper.”

Brook Porter:

Yeah. They definitely didn’t read my paper. But it at least gave me a little bit of, I think, inspiration as to the transportation sector. And so that helped me look for opportunities at UC Berkeley. I went into fuel cells initially after graduating, because I thought they had the potential to address the key technical challenges in EVs, which are range and refueling time, better than batteries. And there just wasn’t much on the horizon with batteries that suggested they would get there. So I started a company right out of school, or I worked at a company actually for a couple of years, and then started a company in Southern California that was acquired by a UK firm that became came a company called Intelligent Energy. We did a lot of really cool work, a lot of great technology development, mainly for the automotive sector. That was our largest market that we were selling technology into. Probably the best product we worked on was actually an electric bike, and I was fortunate to get my first patent working on that project. It was called the Envy, stood for “emissions neutral vehicle”. And the idea at the time was to revolutionize urban transportation, first in the developed world, and then ultimately in the developing world, which is something I’m still working on today. But, at the time, the technology had, I think, a critical flaw. Fuel cells had a critical flaw, which was the need for new infrastructure to distribute hydrogen. And so we thought we had a strategy that addressed that flaw, but it turned out to be too complex and too capital intensive. So I realized the timeline for commercialization of fuel cells was going to be quite long, and I didn’t have even a lot of faith that,

Jon Powers:

Okay, what is the timeline? What window is this for you? Like early 2000s?

Brook Porter:

2002 is when we started the company, and 2006 was the time that I ultimately left after doing some cool work, but it just felt like, ironically, like some of the clean tech companies that I worked on nearly a decade later, that were great technologies, but they were just always needing another round. And it was always just a couple of years out. I didn’t like the nature of that type of a business. I wanted to get to something that had a more near-term application. That’s what led me to start a company working on low-carbon liquid fuels, we called PRIMA Fuel. And we initially thought we could solve the diesel emissions issue in the Port of Los Angeles and make a big impact while building a valuable company. We built some great technologies that ended up being adopted by a majority of the biofuels industry, but we learned some hard lessons on the oil industry and the stronghold they have on the sector across the value chain.

Brook Porter:

And it was difficult to extract value as a startup. So I give that background as a little bit of context for why Kleiner Perkins was interested in me at the time. This was the late 2000s, approaching 2010. They had ramped up their investing in clean tech and wanted to add some of the technical and operational expertise to their venture team. I had a unique background as a chemical engineer with 10 years of operating experience across two startups. So it was a pretty natural fit. That’s basically how I came to Kleiner Perkins.

Jon Powers:

So I want to come back to the electrification of transportation piece and talk a little more about that. But from personally, when you made that transition, from being on the operational side, running a company, getting into the real nuts and bolts, what lessons did you learn from that have helped you in the investor side? You know, I imagine there’s probably a lot of investors. Actually, I know this, because we’ve been engaging a lot of investors who’ve actually never made that leap, that don’t come from the operational side. So it obviously gives you some really valuable insight. What are some of those experiences, and how do they help you as an investor?

Brook Porter:

It’s always interesting to look back. I think there’s just so much that I’ve learned over the past seven years as an investor at Kleiner Perkins. It’s hard to summarize those lessons learned for operations. It’s probably more valuable than any MBA or PhD I could have received.

Jon Powers:

Right.

Brook Porter:

And so, looking back on the operational stuff that we did, there’s so much that we did wrong, and I wish I had the lessons learned now. Some of the things, so I’ll talk about some of the operational lessons learned, and then I’ll talk about some of the lessons learned on the investment side. But on the operational side, I never really thought about prioritizing risk removal. That was a concept that I just hadn’t really been exposed to. And so figuring out what are the biggest risks in your startup and prioritizing those, and spending your most valuable dollars, which are the first ones that you get, to try to remove those risks is just such a powerful and straightforward concept, but it’s hard to do as an entrepreneur, because you’re faced with all these risks at the same time. You’ve got all these challenges, and you try to solve them all simultaneously, and it’s very easy to fail when you do that.

Brook Porter:

And so, for me, in the companies that I was operating in, we had a lot of technology risks. So we thought about that risk. We thought about manufacturing, and getting to scale, and costs, but we didn’t think about commercialization risk. We didn’t think about the market side nearly as much. And in the end, both in fuel cells and in biofuels, that was the real critical failure, was not understanding how you go to market, how you interact with incumbents, how you protect value that you can extract over time, understanding the regulatory risks. Those are all things that I think we underestimated. And that’s one lesson that I try to bring to a lot of companies is really thinking holistically about the business, what the highest risks are and prioritizing those.

Brook Porter:

But I see a lot of investors, particularly in this space where we’re at now with G2 Venture Partners, where, in the industrial side of a lot of businesses, this intersection of industry and innovation, and a lot of investors don’t have the operational expertise. They don’t have the experience. And I think it’s really hard to be a good investor and not have that operational experience. You know, I make an analogy to maybe sports teams and saying, we often hear a high school athlete say, “Oh, I can’t wait to become a coach of an NBA team.” How can you possibly be a good coach if you were never a player? So you kind of have to go through that transition, because at the end of the day, an investor is, I think, very analogous to a coach. You have this board, you’re in the board meetings, providing advice at a high level. It’s very much analogous to a coach. But if you haven’t been in the game, you haven’t gone through the hardships and experienced those things by yourself, how can you give good advice to a CEO?

Brook Porter:

So that’s my perspective. Of course, I’m biased, because I have some expertise, but I think it is important to have both sides, both sets of context. And I think you see a lot of great investors that have the profile.

Jon Powers:

I mean, look, living and breathing it every day right now, where the investors that we really have strived to find are folks that are value adds, people that can really help us and guide us and help us maybe sometimes save months off of addressing issues, because they’ve done it three times across three different companies and said, “This is the best way to tackle it.” So, that’s interesting.

Brook Porter:

Yeah. Just one final note on that. I think finding the dollars is the easiest part. Right? Finding the investors that are deeply committed partners that that can add value that aren’t just financiers, that’s what’s really hard to fund.

Jon Powers:

Absolutely. So I want to talk a little bit about market, and then I’m going to talk about the new fund, because I think they obviously go hand in hand. I think it was interesting in your personal story, you talked about, as early as 1993, writing about the electrification of the transportation industry. You’ve seen now the clean tech market, and the rollercoaster that the clean tech market can be, really evolve since the beginning of the century. But we’re seeing a lot of really interesting things align now from the market perspective, from the policy perspective, from the capital perspective, whether it be talking about electric vehicles and of the cool electric things like Proterra bus and some of these things that are really going to be critical to addressing climate change and sustainability, they’re actually getting implemented now, in finance. So talk a little bit about what you’ve seen in the market, and where you see it going.

Brook Porter:

Yeah. I mean, so much has changed in the last 10 to 15 years. If you look back in the 2000s, the concept that solar could be cheaper than any other form of power generation, it’s just, that was a crazy idea with the point that solar was at then. Same thing with batteries. It’s why it wasn’t obvious to use batteries as a primary means of energy storage, because the technology was so far away from being viable. So I think the biggest thing is that you’ve seen these incredible technology curves evolve in the last decade, and solar costs down, lithium-ion battery costs down. Those are two obvious ones, same with cost of wind. But there are a number of other technology curves that are perhaps equally important. And when you combine some of these technology curves, they get really, really powerful. So things like satellite imagery, right?

Jon Powers:

Right.

Brook Porter:

The idea that you have an image of every square meter of the planet every day now from companies like Planet Labs. Yeah. It’s amazing that that’s actually here, and you can now use that data to transform the way you think about logistics and transportation and agriculture. The idea of drones, that you can buy a fully autonomous, machine vision capable, DJI drone for 700 bucks today.

Jon Powers:

Right.

Brook Porter:

That power of robotics and automation and compute, that’s insanely powerful. It just wasn’t even close to possible 10 years ago. And there are a number of these. AI, machine learning, a number of very powerful technology curves. That’s really the inspiration behind our fund, is that these technology curves have opened up possibilities to create new businesses, where a lot of the incumbents, maybe they weren’t a part of those technology curves. They’re just now reacting to the reality of those technology curves. And so they’re not in a position to leverage them any better than a startup is.

Brook Porter:

That’s how startups can leverage these technologies, start to generate products in a much more capital-efficient way, get to market, start to build data, build users. And there’s a lot of flywheel effects there that can really give an advantage to a startup relative to incumbents. Transportation, I think, is one of the sectors where this is most obviously true, where you’re seeing every automotive OEM scrambling to come up with a strategy to react to a few technology trends, electrification being a major one. I mean, just the amount of announcements in the last 90 days from major OEMs saying they’re either going 100% electric, abandoning the internal combustion engine. Countries saying it, India is saying it, China’s saying it, California is saying it. That’s amazing. And to imagine that 15 years ago was, I wouldn’t have guessed it would’ve happened this quickly. So it’s kind of a classic S-curve adoption, where it happens more slowly than you think initially, and then it starts to pick up steam, and it all starts to change much more quickly than you could have imagined.

Brook Porter:

And so we’ve invested behind electrification, behind connectivity, the amount of data that you can transfer and you can connect basically any device now that just wasn’t possible 10 years ago. And then, of course, the concept of sharing and the sharing economy, whether it’s companies like Uber, where you can share a ride, or companies like Turo, where you can share a car, these are very powerful forces that are changing the way we think about building cars, the way we think about how cities will operate. So there’s just so much opportunity there. I can go on and on, but I think that’s, it’s wholly different than the early days, where you had to think about inventing the technology to even enable that to happen.

Jon Powers:

Right.

Brook Porter:

Now, it’s already happening. And so the question is, instead of having to build the tools, the toolkit is right in front of you, and you can grab the tools off the shelf and start to build the company, leveraging incredibly powerful tools. So, that’s it.

Jon Powers:

Yeah. Well, I think you hit on a really important theme that runs through your career, which is impact through invention. Right? So, if you look back at everything from the electric bike you talked about, the reason we can get to these points is because a variety of inventions have come together that are now allowing all these market forces to, for lack of a better term, begin to merge, and provide opportunity for new companies that are really looking to move in this space, recognizing that you really can’t go it alone, that there’s going to be a significant amount of partnering and understanding where everything else is flowing, whether it be your data, or your platform, or even the fuel source for whatever you’re going to be doing. It’s really hard to create the self-contained, market-transforming, especially in the energy space, widget these days, but it does come together.

Jon Powers:

So let me talk for a second about the new fund. For folks that don’t know, G2 Venture Partners, I’m going to quote your philosophy here. You “work together to find and build and support companies that are modernizing and revolutionizing the traditional industries that make up over half of the global economy.” So you’ve talked a little bit about the thesis of the fund. Feel free to add a little more color to that, and hear a little bit about how you all are finding and identifying investments, and what are some of the really interesting things that you’re looking for.

Brook Porter:

Yeah. So I just think it’s an incredibly exciting time to be sitting here in Silicon Valley, at the heart of so many exciting technology changes, but we have this unique network at G2. My three other partners and I have spent the last 10 to 20 years working in traditional industries like transportation and agriculture, energy, manufacturing, logistics, and those sectors are largely analog today. The data that flows through those industries is isolated. It’s not leveraged. And we see a massive opportunity applying some of these emerging technologies that we see in Silicon Valley and beyond to those traditional industries. So that’s the primary thesis of the fund, is leveraging these technology curves that I mentioned and how they can apply to traditional industries. What we’ve learned through, you know, you mentioned invention, and I think invention is incredibly important, but one of the things that I’ve learned as an entrepreneur, and certainly learned as an investor at Kleiner Perkins, is that the invention alone doesn’t make the company.

Brook Porter:

Great companies certainly have lots of inventions, but having lots of inventions doesn’t make you a great company. It really comes down to the people that matter the most, and building great products. That’s what we look for at G2, is great entrepreneurs that can see the landscape of technology and put together really exciting products that sometimes touch consumers, but always have some back-end connection to traditional industries and we think have some transformative power in the way that traditional industries think about reaching their consumers. And so there’s an interesting interplay there, where we’re not consumer investors. Our real expertise is in understanding the main players in traditional industries. We have deep networks across those sectors. So we leverage those in the fund. We have some very exciting investors into our fund LPs that we work and collaborate with to help identify opportunities, to help understand how these startups can scale, and leverage those relationships in unique ways.

Brook Porter:

So we find a lot of things on our own. We’re very thesis driven. So it’s a little unlike, I think, other Silicon Valley firms, where you wait for the startups. There are so many exciting companies in Silicon Valley. It’s a very fervent environment, where you have a lot of opportunities around you. We like to be more thesis driven. So we really think about how can a technology impact an industry. We do deep dives, where we spend months studying the sector and every player in the sector, talking to our strategic partners about how those technologies might impact their business. And that’s usually where we find our investment opportunities.

Jon Powers:

Brook, is there a sweet spot that you guys are looking to in terms of funding, and target in terms of maybe range and where a company is?

Brook Porter:

Yeah, we’re a little bit later than a traditional venture company. We’re kind of early growth, late venture. We like to find companies that have their technology risk removed to a meaningful degree, and have some degree of commercialization risk removed as well. So we want to see companies that have a product in the market. They have some product market fit identified, and usually have a few million dollars of revenue and are looking for growth capital. That’s our sweet spot.

Jon Powers:

Excellent. So I’m going to transition here for a second. You talked earlier on about operations and the importance of seeing the whole field when you’re launching a company. And part of that is understanding the policy landscape, understanding how to engage in the policy landscape. I think you’ve had the opportunity to work with some real titans in the space, both John Doerr and Al Gore. These are leaders who’ve personified the motto of leading by example on issues they care about. What have you learned from that experience, and what lessons do you share with CEOs, having seen all of that firsthand?

Brook Porter:

Yeah, look, I’m so fortunate to get to work with John and Al so closely. I never could have imagined that. And I’ve certainly learned so much from them. At the end of the day, they think very holistically about issues. They think about the business aspects, technology aspects, policy, and I think that’s what makes them both so special and so unique. I think they recognize that any one of those aspects doesn’t bring change alone. You really have to push simultaneously on all fronts. They also don’t think anything is out of reach. I mean, they really think big in terms of the level of impact that they can help influence, and they’re also very thoughtful about how they use that power.

Brook Porter:

I think the truth is that every company will have to deal with policy and regulation at some point, especially in fields like energy, transportation, and agriculture. And if you don’t have some core competency in your company, you’re likely to get blindsided by it at some point. So it’s best to get ahead of it. But, I think today in so many companies in Silicon Valley, particularly with millennials, they’re looking for meaning. They’re looking for impact in the work that they do. They’re not just looking for a role or a salary. So I think the only way to get the best talent is to have a company that has some deeper mission. I think that’s one of the reasons that both John and Al have been so successful in their own investing and business careers, in addition to, of course, Al’s enormous success politically, is that they look for those types of companies. And it turns out that those are the companies that deliver the best returns.

Brook Porter:

What Al has done at Generation is remarkable. They’ve outperformed nearly every other fund in the world by being very thoughtful and critical about the values in the companies that they invest in. And that’s firmly what we believe, too, at G2. We think the best opportunities today, the companies that have the best people and have the best products, are going to be those that are moving the needle meaningfully. We see such an opportunity across the sectors that we invest in that we think there’s lots of opportunity and lots of interest from great entrepreneurs in building and revolutionizing those industries. So that’s one way we’ve leveraged those lessons.

Jon Powers:

Yeah, that’s amazing. I’m going to end with a final question that I ask all the folks we talk to here at Experts Only. If you could look back, and you’ve had an incredible career. There’s so much more coming. But if you could sit down for yourself coming out of high school, or even coming out of college, having written a paper on the electrification of transportation, what advice could you give yourself to make sure that you end up on the path that you’re on today?

Brook Porter:

I thought a little bit about this, and I didn’t come from a very traditional family. I didn’t have much exposure to business or investing growing up. I certainly didn’t have any network to leverage. So everything I’ve done, I’ve kind of learned from scratch. I’ve thought about every problem or challenge I’ve faced from first principles, or at least I’ve tried to. But I was never really very confident in my own abilities. It was sort of like, I have no idea what to do here. Going into energy was so daunting. I remember thinking, “This is so complex. How could I ever learn how all of this works?”

Brook Porter:

And the reality is that, like every great journey, every great adventure, I like to climb mountains and I think about that. You look at a giant mountain, and you think, “How could I ever get up that thing?” Well, it’s really just about putting one step in front of the other. And so, if I could tell myself one thing, I’d say, just follow your heart and believe in yourself, and take one step at a time, because that’s how you get there. You just got to keep moving and have some faith in yourself. I probably could have used a little more of that in the early days.

Jon Powers:

Well, first of all, thank you so much. That’s great advice. Thank you so much for joining us. I think we obviously all wish G2 the best of luck, because we need that type of holistic thinking and driving the companies forward that you guys are really looking at. And I think we will look forward to following up with you in the future, as things are progressing. And really appreciate you joining us today.

Brook Porter:

Thanks so much, Jon. This was really fun.

Jon Powers:

What a great conversation. Brook really provided some amazing insights, and we look forward to sharing those and others with you here at CleanCapital’s Experts Only podcast. Please visit us cleancapital.com. And I’d like to thank our producers, Emily Connor and Lauren Glickman, for their fantastic work. We wouldn’t be able to do this without you. I ask you to help share this podcast. And if you have any ideas or thoughts for other episodes, please feel free to reach out through our website and let us know. Thanks so much, and look forward to continuing the conversation.