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A Pitch for Deeper Green Thinking from Venture Capitalist John Doerr

March 2007

STANFORD GRADUATE SCHOOL OF BUSINESS—Venture capitalist John Doerr, a glass-overflowing optimist pumping hundreds of millions of dollars into green innovation, predicts a climate change crisis.

The more he learns, the more concerned he becomes. Less than 5 percent of the world's energy comes from clean renewables. More than half the world's energy is wasted as heat. By 2050, China will produce as much greenhouse gas as the entire globe releases today.

"It's stupid that we dump 70 million tons of carbon dioxide into the atmosphere every day like it's an open sewer," said Doerr, a partner at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. "It's stupid that we bottle water in Fiji and ship it to the United States."

Doerr doesn't believe the world's population will change its wasteful ways in time to stop global warming, he told an overflow audience at the Stanford Graduate School of Business April 5. Before every triumph stands an army of obstacles. It's easy to get discouraged, even for a can-do optimist like Doerr. The key, he said, is a multi-pronged attack.

"We've got to plan to overachieve on this," he said. The challenge is to "reindustrialize the planet," a business opportunity bigger than the internet if investors catch on in time.

Venture capitalists invested $1.2 billion in green businesses in 2006. That's twice as much as they invested in 2005, but far short of what the challenge calls for, Doerr said. Likewise, the federal government's $1 billion budget for renewable energy research isn't enough. Doerr compared these numbers to ExxonMobil Corp.'s nearly $40 billion in profits in 2006.

"It's almost criminal we're not investing more," he said. "It is criminal."

Doerr owes his call to environmental activism to his 15-year-old daughter, Mary. Last summer, after Doerr had seen Al Gore's movie, An Inconvenient Truth, he asked Mary what she thought about global warming.

"I'm scared and I'm angry," he recalled her telling him. "Your generation created this problem; you better fix it."

As a result of the conversation, he said, he jetted to Brazil to learn about renewable energy, traveled to Davos, Switzerland, to liaise with world leaders, and helped set up the Greentech Innovation Network, a consortium of scientists, policymakers, and entrepreneurs focused on solving environmental problems through innovation.

Doerr sees progress in some environmental arenas, but not enough to make a dent in the constant stream of greenhouse gases. Take Wal-Mart, for example. The company, which promised to reduce its energy consumption by 20 percent, busied itself painting roofs white, building skylights, and putting doors on refrigerated display cases. Wal-Mart also pledged to sell 100 million compact fluorescent bulbs to its customers.

"These are all simple solutions," Doerr said. "You don't have to engineer new microbes to get this done."

But they aren't enough. Despite its gargantuan size—if Wal-Mart were a country, it would be China's sixth largest trading partner—the retailer can't combat climate change on its own. All other companies need to follow suit, Doerr said.

Doerr is also active on the policy front. He is heartened by the fact that last year California passed climate change legislation, a bill for which he and a dozen other Silicon Valley entrepreneurs traveled to Sacramento to show their support.

But Doerr is realistic. California accounts for 7 percent of U.S. greenhouse gas emissions, 1.5 percent of what's released worldwide. California can lead by example, but it can't fix climate change on its own, he said.

Doerr is also excited by alternative fuels. In Brazil, 85 percent of cars are flexible on fuel, which means they can run on either gasoline or ethanol. Brazil's government mandates that cars run on ethanol and that gas stations sell it. In the United States, 5 percent of cars are capable of running on alternatives to gasoline, but most owners have no idea, Doerr said.

Brazil's bold policy makes an environmental dent, but a relatively small one. Its flexibly-fueled fleet cuts Brazil's greenhouse gas emissions by 10 percent, which is slightly more than 1 percent of world emissions. "There's no silver bullet," Doerr said.

Doerr also talked about innovation such as "synthetic biology," in which scientists are working to redesign microbes to produce a better biofuel. In the future, he envisioned designer bugs that act as miniature chemical factories by excreting a new fuel source.

Yet he sees successes to date as bittersweet. Innovation is exciting, progress on policy is always welcome, but on the whole, the global response has been equivalent to saving for retirement in the last five years of life, Doerr said. "I don't think we're going to make it," he said.

Yet his inner optimist couldn't help but encourage his audience of future MBAs to think seriously about making their next venture a green one. Make meaning as well as money, he said, among other advice:

  • Choose your first job based on the experience, not how much money you will make. Carry a bag (sell something), launch a product, manage a dozen people, learn from great companies, and "swing for the fences when your time is right."
  • You will be judged on your ability to listen and think critically.
  • Confront problems, not people.
  • Learn.
  • You'll get extra points for a sense of humor.
  • Always network. That means learn about people and what they do. Also, develop a couple of mentors.
  • Know that life is a marathon but live in the moment.

—Sarah Ruby