Jon Powers:

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Jon Powers:

Welcome back to Experts Only Podcast. Thank you so much for joining us. We’ve got a really exciting and deep interview today with Dr. Arun Majumdar, who had been the Director of Department of Energy’s ARPA-E and is now at Stanford University. Arun will take us through some of the amazing transformations that are happening today in the energy space, and we’re going to talk a lot about how we are in a “tipping period” as he calls it. We’re seeing fundamental change to what’s happening both in the energy markets, on technology, and I think the future in this space. So I hope you enjoy this conversation as much as I did. Arun, thanks so much for joining us on Experts Only Podcast.

Arun Majumdar:

Well thank you for having me.

Jon Powers:

Absolutely. You and I first met when you were serving President Obama as the Director of Department of Energy’s ARPA-E, and I was serving at the Pentagon as a special advisor on energy, and then later on we did some work together when I was at the White House. Your work and leadership across the government was significant, and I definitely want to dive into some of that work you did while in government, but I want to step back and talk a little about your personal journey, because it’s really interesting. You studied mechanical engineering in Bombay, and then left and came to the US to get your PhD at the University of California Berkeley in 1989. First of all, what got you into mechanical engineering, and then later, what brought you to the US?

Arun Majumdar:

Well, I had no intentions of going into mechanical engineering when I was a kid, but I used to tinker at home. I used to build stuff, I used to take apart things, much to the annoyance of my mom and dad. And sometimes when I would take apart things, I couldn’t put it back together, and that really annoyed people, but I suppose I was doing engineering at home. And when the occasion arose to, “Hey, can the area that I like to pursue for my education…” And decided to get into engineering. And so I was fortunate enough to get into one of the IATs on this case, IAT Bombay, and graduated from there.

Jon Powers:

Were are your parents engineers?

Arun Majumdar:

My dad was an engineer. Yeah. He was an electrical engineer.

Jon Powers:

Did it bother them that you went mechanical instead of electrical?

Arun Majumdar:

No, they don’t mind it.

Jon Powers:

I’m just kidding. So then you made the decision to come to the U.S., and come to go to Berkeley to get your PhD. First of all, just making that decision and making the move from home, how challenging was that and what sort of brought you to the U.S.?

Arun Majumdar:

It wasn’t challenging at all actually, because there was a lot of my friends at that time who were graduating with an engineering degree from the IATs who wanted to go to higher education and you can’t find a better place for higher education than the United States. So many of us applied to graduate school out here, and probably half the student population came out here. I’m talking about 1985 now.

Jon Powers:

Right.

Arun Majumdar:

Yeah. So it wasn’t that hard decision at all. And frankly, I was very fortunate to get into UC Berkeley with a fellowship at that time. And so that’s how I ended up there.

Jon Powers:

And then you stayed at Berkeley for a good part of your career and focused obviously at the Lawrence Berkeley National Lab, where you were before you came to work as the director of ARPA-E, what attracted you to the university community? And then why the lab? And I think for folks that don’t understand the lab, talk a little bit about what your role was there and what you were doing.

Arun Majumdar:

Well, first of all, when I graduated with a PhD in 1989, usually Berkeley doesn’t hire you back right away. So I left and got a faculty position at Arizona State University. That was my first job. And then I moved to UC Santa Barbara, and I was there for about four and a half years. And then in late ’96, or early ’97, I joined Berkeley as a faculty in mechanical engineering, which going back to your Alma Mater was a big deal. Berkeley is an amazing place in terms of science and engineering and just broad in a public education. It is probably one of the best, if not the best universities. And one of the real advantages, at least in science and engineering, is the fact that Lawrence Berkeley National Lab is right next to it.

Arun Majumdar:

And Berkeley campus would not be what it is without Lawrence Berkeley National Lab, and Lawrence Berkeley National Lab would not be as a national lab what it is without UC Berkeley right next to it. And so this partnership between the two organizations was an amazing thing to watch. It had long history all the way from Ernest Lawrence. So I was very fortunate as part of my research work initially, to be included in what is called the material science division at Lawrence Berkeley Lab. And I was very busy doing my research. I was at a lot of collaborations across physics and chemistry, material science, and it was going terrific at that time.

Jon Powers:

So it’s interesting. You’re diving into the technical part and really understanding the advances in technologies that moved you forward, and later you went and when you served at the Department of Energy, you working in, in essence, an organization within DOE that’s really helping to put some of those first mover technologies out there in an exciting way. And later on, now you are also working in the venture space and we’ll come back to some of that a little bit later. What sort of moved you out the pure research space into this, I wouldn’t even call it, operational space a little bit, and then the venture space as well?

Arun Majumdar:

Well, first of all, I had no plans to go to Washington. I was busy teaching classes and doing my research and going about doing my business as a faculty position, as a faculty of there, and as a scientist in LBL, but things changed when Steve Chu who was then director of Lawrence Berkeley Lab. He was, in many ways, inspirational. He really wanted to solve the world’s largest problems and health and energy climate using the scientific horsepower that Berkeley and LBL could provide. And he was very convincing and he was inspirational as we all, many of us, changed our research direction because of him.

Arun Majumdar:

And he asked me to also provide leadership in the energy division at LBL. And then when he became the Secretary of Energy we never thought he would be become the Secretary of Energy when President Obama was elected, but he became Secretary. So when he became, he kind of twisted my arm to join him in Washington and lead this new agency as the founding director, called ARPA-E, and which after some thinking about it, I decided to join. And so that’s how I ended up in Washington.

Jon Powers:

And was the idea of ARPA-E the idea of this catalyst to move technologies into the markets, something that you had been working on and sort of outlining, or was it an idea that came out of a third party or out of the bureaucracy and you sort of got you moved into that role?

Arun Majumdar:

Well, let me clarify a little bit about ARPA-E. The purpose of ARPA-E, the mission, is to invest in research on breakthrough ideas. Transformative ideas that if successful would have the chance of creating some foundational technologies, create the foundation for new industries that do not exist today, knowing that it would take time, but someone had to initiate it because frankly, these ideas, while could be wildly successful, they also were risky. And so the idea of ARPA-E, the mission of ARPA-E, is to identify these breakthrough transformative ideas and invest in them, and invest in the people who came up with these ideas. And so that was the purpose. And then we knew, we did the equation that if these ideas were successful, there would be very strong interest in the market, but the market part was later on, but the focus wasn’t to invest in research.

Jon Powers:

And so as you came in and you really began to stand up ARPA-E, where were some of the verticals that you first began to focus? I remember going to a series of the summits that were taking place here at the National Harbor. And every year it got more and more exciting and more and more folks are coming from around the country. And you saw this really great blend of people coming up with really interesting ideas. And then you’ve got the venture money and other money, private equity money coming around and saying, “Where should we be investing?” But that all grew over time. How did you first identify those first verticals?

Arun Majumdar:

Well, the first thing that happened, and this is even before I joined, and this was a decision that Steve Chu made, was to create what is called an open funding opportunity announcement. And the idea of open is not to focus on any particular area, but to open it up to new ideas with some criteria, these are they have to be transformational ideas that cannot be incremental, but if successful, they could be revolutionary and could be disruptive in the longterm. And so those were the sort of basic premises, and it was opened up for ideas. And I think ARPA-E received 5,000 proposals. It broke down the whole computing system and the software to handle these things. But I think out of that, there was a lot of filtering that happened, and this was done by the team before I even joined there.

Arun Majumdar:

And they came up with 37 or 40 proposals that were the ideas were absolutely game-changing. Risky, but game changing, potentially. And after that, what we found is that there are some patterns out there. And what we then did was to recruit the best of the best people from the research community into ARPA-E. And one of the things that we made a decision was that when you really hire smart people you don’t tell them what to do. You ask them what should be done. And we told them that, “Look, you have about $40 million per program to be spending for three years. What would you do to create transformational technologies? What kind of research would you be funding?” And so these people told us what are the areas there that we should be investing in.

Arun Majumdar:

And it so happened. It was in the area of beyond lithium ion batteries. It was beyond today’s air conditioning and refrigeration, which are huge energy consuming devices. How could you make them twice as efficient as what they are today? It was in the area of the electricity grid, new technologies that could be transformational for the grid. It was in the areas of how do you synthesize, how do you convert CO2 into fuels, in all of these. This came out from the bottom up from these really, really smart program directors that we recruited.

Jon Powers:

Fascinating. Talk about some of the successes that you had as the organization grew. And for folks that, that aren’t aware, ARPA-E is a program within Department of Energy, like any program within the government it has to get funded. And I think Arun’s early success in this space, and the organization’s early success, grew a lot of great attention where later on in the budget cycle, it was actually supported pretty widely in a bipartisan way, which is not always the case here in Washington, DC, and provided the support it needed at the time to really make some impact.

Arun Majumdar:

Well, success happens over a length of time. And what we focused on is that, what can we do to be successful in the short term while we were there, but also set it up for success in the longterm. Which means what’s the DNA of the organization. What kind of branding should it have, what is the message that we should be doing? What’s the mission, what kind of things we should be focusing on. And frankly, what are the things we should not be focusing on at the same time? Those are absolutely important.

Arun Majumdar:

I would say the first success was to recruit really top talent because without the people, nothing moves, nothing happens. And so we were extremely successful in recruiting some of the smartest people. And one of the things that I focused on is to recruit people who are active in the research today, which means they are completely impressed with what’s going on, and have them come and serve for three or four years in ARPA-E, and then go back and bring the intellect and the talent to really lead and provide some thought leadership to the whole community.

Arun Majumdar:

And so I would say the first success was to recruit the people. Second was to create the culture of really trying to go for excellence in everything we do. It’s not just the scientific work, but also in the integrity of the organization, how we manage your money, in the transparency, in the speed that we operate, how do we cut through bureaucracy in a government that is known for bureaucracy because we wanted to cut through bureaucracy, because people only had three or four years to serve and they wanted to make a dent in this universe, right? And if you want to do that, you got to be fast. And so we created a bureaucracy an operation, which was at the speed of the private sector. And that was our goal. In fact, frankly, at times we found ourselves to be faster than the private sector, and that was the kind of bar that we set for ourselves.

Arun Majumdar:

And then we had to convince, we had to get the message out to the ecosystem, to the public, after all we’d be using public taxpayer dollars. And part of our stakeholders is Congress and we had to get the message out. And one of my big jobs was to really engage with Congress, the members of Congress, the relevant members of Congress, and frankly explain to them that they are the stakeholders in our success. And to explain to them what we are doing, what is going well, what is not going well and how we need their help to actually improve and serve the American people. And so that, I spent a lot of time on that. And this was done of course, in a bipartisan way, frankly, in a nonpartisan way. This is about the United States. And frankly, I was very pleased to see members of Congress respond in a very, very positive way.

Arun Majumdar:

So that was, I would say, was a success. We also engaged the research community as well as the business community, because we felt that if some of these ideas, many of these ideas would fail because these are high risk ideas, but should be tried. But if some of them would be successful, they would have huge impact on business. So we engage with the business community. We engage with top leaders in the United States, people who had shown amazing leadership, people like Fred Smith, the chairman and CEO, the founder of FedEx, he became part of my brain trust. So was Bill Gates and many other people, because I really wanted to pick their brains as to how to set up an organization and make sure that it is scalable. It is successful. So they were huge parts in our success. So there was a lot of fronts that we had to work on. Things worked out quite well.

Jon Powers:

Yeah, absolutely. So with that in mind, sort of laying that foundation of excellence and putting the culture in place. I think having worked in the bureaucracy, understanding the draw of an innovative shop like that to especially those leading researchers out there, sort of in the current environment here in Washington a lot of the DOE budget’s under attack, I think, including some of ARPA-E stuff. If you could tell anything to lawmakers today that ensure that their support gets out there, or if you could give a message to the entrepreneurs who could advocate on something like ARPA-E’s behalf, what’s the message you’d give them?

Arun Majumdar:

I would say that frankly right now, in the last I would say 10 years and probably in the next 20, 30 years, it’s one of the most transformational times in the field of energy, energy is sort of the bedrock of any economy. It goes into economic growth. Without energy there is no economic growth. It is a national security issue as you know, very well. It is an environmental issue. How we use energy has an impact on the environment. And so one needs to be very balanced about how we approach this thing, but it is the bedrock of any country. And right now, after about a hundred years of an amazing success, whether it’s the electricity grid, whether it’s transportation fuel and our mobility and automobiles and planes and all that. After about a hundred years of success, the next, I would say 20, 30 years is probably the most transformative time worldwide in the field of energy.

Arun Majumdar:

Things are changing. And things are changing because of all the drivers that we see, whether it is reducing carbon emissions, whether it’s making more efficient, whether it is transformation of the transportation industry, whether it’s going to electric vehicles and autonomous driving, I mean, you name it, it’s happening worldwide. And I think the United States what our core competency is innovation. And in this time of major transformation worldwide, innovation is the number one thing. I mean, we have to rely on our core competence, which is the science and engineering to innovate, new technologies and new products and services. And that’s our core competence. And we should be putting the gas on that pedal right now. And ARPA-E is a slice, is one sort of to really nail it. And I would tell Congress that in this time I know we have budget problems, et cetera. The budget of ARPA-E in the big scheme of things is actually is running off error. This is when we really need to support our scientists and engineers who can innovate and give the United States the technological lead that leads to a national security economic growth and a clean environment.

Jon Powers:

It’s interesting, if you look throughout your career, you definitely don’t fade away from the most and trying to wrestle some of the biggest challenges out there. And I think you just hit on some of what folks that have paid attention to your career have seen you talk a lot about a series of sort of post administration speeches, the idea of sort of navigating the turbulence of the global energy system. And I want to talk about some of the challenges you laid out there about innovation being a really key to that success, but there’s so many other factors involved today, whether it be the right capital to work, bridging these technologies from the research lab into the market wrestling with the regulatory, what a new company wants, they could create the greatest whether it be demand, management or electric vehicles’ system they sell to in many cases, wrestle with 50 different energy regimes out there today, right?

Jon Powers:

And utility regimes and policy structures. But it seems like today we’re at a time in the market that everyone is talking about this transformation in a really exciting way and sort of laying the groundwork so that some of that change that has to happen to really, I think from my perspective, really decentralize what we’re doing is coming together. You lay out sort of three big challenges for the global energy system. And I’d say part of that can be replicated right here at home, but how can we decarbonize cost-effectively and continue economic growth for all? How can we provide access to affordable modern energy for every human being in the world?

Jon Powers:

I think we’re seeing with economic growth across the world, that that’s a critical step for us. And how can we make our energy system resilient, adaptable, and secure from various threats, like cyber or climate. I think we’re seeing this today in the Northeast with the cold streaks and having to shut down a nuclear plant. These are not minor challenges for us to wrestle with. So for our listeners, how can you sort of sum up what we need to do to help navigate these challenges and what we could be doing better to tackle them?

Arun Majumdar:

Yeah. So I mentioned about ARPA-E and ARPA-E’s mission is to really focus on technological innovation. And that is absolutely necessary, but not sufficient. You have to think about innovation as you mentioned in the investment in the financing area, because you can develop this amazing technology, but to nurture it all the way to scale and in energy field, it has to scale to large scales otherwise it won’t have any impact, you need capital, and we need to figure out how to invest in that. And I’m delighted to see Bill Gates and his cohort of very wealthy people to put together this breakthrough energy coalition and the breakthrough energy ventures, which really is trying to change the model of venture investment with a long-term perspective. So that is necessary. We absolutely need some innovation in the regulatory framework as well.

Arun Majumdar:

We are seeing frankly, living in California and the electricity side, we are finding really a transformation going on in our electricity system where community choice aggregation is coming in in a very big way and changing our electricity, I would say business model of how things ought to be working. And I think we are going to see a lot more in this area. So I think one has to step back a little bit from all the various aspects of energy and see how can we really align the innovations of technology to the innovations in finance, to innovations in regulations and policy so that they actually reinforce each other as opposed to fight each other. And oftentimes, we have found that technology and policies are kind of going against each other. I think we really need to figure out how to be enlightened about all of this, to align all of them so they can actually speed up each other. So that’s something that is a work in progress.

Jon Powers:

Yeah, absolutely. You hit on, for folks that aren’t aware of the breakthrough energy venture was started by Bill Gates and some other individuals post the Paris negotiations to have a longterm posted traditional sort of seven year fund cycle and money venture capital funds. And that’s helping to tackle some of these new technologies. Arun, from our perspective at CleanCapital we work less than half a percent of institutional capital today, worldwide is invested in clean energy and we’re sort of the next step. So when the technology gets to market, how do you actually finance these projects? And what we are arguing and I think needs to be pushed more broadly, is you have this phenomenal, for instance, divest movement happening with universities and pension funds and others. But now turning that into an invest movement and proving that these technologies are proven, they’re here to stay.

Jon Powers:

The policy regimes are falling in place to support clean energy. And these are actually long-term very solid investments for individuals to take part in. That’s something that we push, but you’re seeing with pension funds and life insurance companies and others starting to really move in that direction. And we want to continue to empower it, to get money, to take those new technologies and actually get them into the market. So are we at a tipping point, do you think, in sort of that both the capital, but also I think the technology piece too, you talk about the next 20 years being incredibly transformational. Are we at that tipping point that will start to drive that transformation? Or what else do we need to do to get to that tipping point?

Arun Majumdar:

I wouldn’t say tipping point, but tipping period. Because I think it’s not one event or anything, but I would say it is a period of time where things are getting disruptive. When the price of electricity from wind, or I would say the cost of electricity production from wind and solar becomes cheaper than that of natural gas. It changes the ballgame. When the cost of batteries have come down by a factor of four or five in the last eight years. And I would say in the next five years or 10 years, you’ll find electric vehicles to be competitive in terms of price, as well as range than gasoline cars, well things change. And so economics will drive things in a way that these kinds of changes will happen. And I think this over the next, I would say, it has happened over the last 10 years, it has been absolutely amazing transformation that we’ve seen.

Arun Majumdar:

I think the next 10 years we’ll look and see even more changes that are happening where the traditional ways of energy will have competition. And I think if you have the right market structures and the right kind of a platform for things to compete, I think you’ll find a major transformation happening, not just the United States, this is worldwide. And if you ask large multinational energy companies do they have a clear cut strategy moving forward? And I would say if they’re really honest with themselves, they don’t. They are experiment with things which they should, that’s the right thing to do to see what is working, what is not, because the fundamentals of this business is changing. And so looking backwards in time and saying, let’s look at past data to find out what is the strategy moving forward, is not a recipe for success. And so I think you really have to experiment. You have to try out new things, you have to innovate, and that’s the period that we are entering. We have entered already, and we’re kind of in the middle of this right now, but the next 10 years is going to be amazing.

Jon Powers:

Absolutely. Thank you so much. I always end on a final question to go back a little bit to your personal story as someone who’s established an amazing career in the space. If you could go back to yourself, coming out of school in Bombay or graduating from Berkeley and could sit down and have coffee and give yourself one piece of advice, what would it be?

Arun Majumdar:

Stay in school. Focus on the important things in life, which is academics for sure. I mean take it seriously, read a lot of things besides your own coursework, read the newspaper, read multiple newspapers that give different points of view and don’t rely on only one source of news and frankly, be aware of what’s going on around the world, but don’t ignore your studies, your academics, keep a balanced life, get involved in sports or extracurricular things because that balance is very important long-term. That’s what I would say.

Jon Powers:

Excellent. Well, Arun, thank you so much for your continued leadership. Thanks for joining us today. I really enjoyed having you on.

Arun Majumdar:

Okay. Terrific. Thanks a lot.

Jon Powers:

Thank you so much for Dr. Majumdar joining us today. What an interesting conversation. You can make sure you follow other conversations at CleanCapital’s expertsonlypodcast@cleancapital.com, like to thank our producers, Lauren Glickman and Emily Connor for their support in putting this together. Again, as always feel free to share this and all of our episodes and give us feedback on who we should be talking to. I really look forward to continuing the conversation with you.