This post was inspired by a surprising and humbling realization. I was looking at two well-known climate-tech startups (won’t name names here). One focuses on DER management, the other on optimization for utility-scale renewables. They’ve been around for 5+ and 10+ years, and both publish impact metrics on their website. I was shocked to see that their cumulative CO2e abated were both less than 20 MT, and one was less than 5 MT. That’s a lot of carbon, but also a far cry from the 0.5 GT per YEAR that we need to make a true dent on global CO2 emissions.

My takeaway from this is that the ideation phase, and what idea you ultimately commit to, is even more important than I had previously thought. There’s a school of thought that ideas don’t matter, only execution matters. This is BS (great read here). The specific idea may change and probably will change, but the market you play in matters a great deal, and I would argue sets a boundary condition for how much impact you can realistically make.

So how do you screen for ideas? The way I’ve been thinking about it is by applying 3 filters:

  • Big climate impact potential
  • Intensity of customer pain
  • Solvable problem – by this I mean, a startup is the right vehicle for addressing this problem (versus a problem where policy change is needed, for example). This criteria is probably the most fuzzy and I suspect some problems that are seemingly policy problems can be tackled with the right team, business model, and grit.

Climate impact is the one extra criteria compared to non climate-tech startups. I used to think layering on a filter for climate impact was easy. Now I realize it’s not at all. Each additional layer makes it exponentially/geometrically harder.

This reminds me of a line in Frank Slootman’s TAPE SUCKS – a must-read by one of the world’s premier, no-nonsense operators, along with Amp It Up. Frank reflects that Data Domain would have died if they kept trying to sell to stodgy banks with long sales cycles. “It is hard enough as it is.” I believe the same thing applies when you add an additional criteria for climate impact, or any other constraint.

This is not to say that it’s not worth doing. After all, the whole point of this pursuit is CO2 mitigation. Rather it’s a sobering reminder that applying a climate impact filter does make the game harder. And even if you apply the filter, you have to do it carefully. Not all markets or business models have 0.5 GT per year potential.