The materials industries are stubbornly analog. As seen below, the analog industries like: agriculture, mining & materials, buildings, rail & road logistics, oil & gas, chemicals, utilities and automotive are all early in their digitization adoption.

The overlap between the physical world and the digital world is lagging more capital-light verticals.

But I love this chart. This chart is the landscape of opportunity for startups and investors focused on the energy and industrial transition, logistics, real estate, the built environment, agtech… etc. While these verticals may not / can not get as digitized as media or financial services, I do believe we have decades of digital innovation ahead of us… and that entrepreneurial focus will enable massive efficiencies and wealth creation for the industry participants.

This week, Barclays released a future of the energy economy presentation and there was a big section on hydrogen. And WOW, there is big growth expected for hydrogen. Based on the below chart you can see that the growth is expected in heating and industrial use cases (including steel) and long haul transport / mobility (trucks, trains, buses).

These are also areas where our current “fluid” fuels are more prevalent vs the electrification trend as there is already infrastructure (pipelines, tanks, etc.) in place.

And the report does a good job describing the different generation sources for how hydrogen can be produced:

• Green hydrogen: Hydrogen generated from renewable sources, mainly through electrolysis.
• Brown hydrogen: Used generically to refer to conventional production using fossil fuels by steam methane reforming, without reduced emissions via the use of carbon capture utilization and storage (CCUS).
• Blue hydrogen: Steam methane reforming with CO2 emissions reduced by CCUS.
• Black hydrogen: Coal-based hydrogen
• Grey hydrogen: Natural-gas-based hydrogen.
• Pink hydrogen: Nuclear-based hydrogen

A trend to watch. The combination of low-cost renewable power to create hydrogen could go a long way to drive impact and big business.

Transmission might be the least interesting part of the energy transition. It is also one of the most important lynch pins of the energy transition as transmission improvements tie together new, but remote renewables and consumers. I covered this in an earlier article: The Energy Transition has a Distribution Problem. Back then I wrote:

“Despite rooftop solar’s breakneck growth, big swaths of the US will continue to be served by a utility-scale generation source. And renewable energy’s greatest inputs (wind, solar) are generally most abundant outside of key metropolis areas – see the graph below and the wind speeds in the middle of the country! Ultimately, we are going to need structural changes to our transmission system. And we suspect that digital solutions will play a big role in that change, just as these digital solutions positively impacted the cost curves for solar & wind costs

The Energy Transition has a Distribution Problem

Massive investment into laying cross-country and cross-continent fibre enabled the internet revolution. Similarly, adding new, digitally-enabled transmission superhighways will accelerate our renewable revolution.

Xcel Power Pathway

Yesterday, Xcel announced a plan to build 560 miles of new transmission to bring lower cost, renewable power from rural wind and solar sites all the way into cities. This is a $1.7 billion project and I suspect we will see MANY more of these announcements over the coming years. We will all win with these new build-outs….

“Investments in our transmission systems increase grid capacity, strengthen reliability, help us continue our clean energy transition. This new transmission line will support our vision to reduce carbon emissions and deliver 100% carbon-free energy by 2050.”

Alice Jackson, president, Xcel Energy-Colorado

Here is the link

Cowen investment banking does a great job summarizing the sustainable technology markets.

February was a busy month. I won’t / can’t add too much commentary.

I am happy to see that the next generation mobility firms that are rewriting the future of our sustainable transportation markets will have access to the public markets. This access provides BOTH a source of capital for these high-growth companies, and provides the public market investor the ability to participate in the industry’s value creation. Win-win.

In Q4 2019 Energize Ventures invested in Beekeeper. We were proactive in gaining a position on the cap table. Why? Our energy and industrial network told us of the need to find better company-wide communications and collaboration tools. Zoom and Slack and Microsoft Teams are built for the desktop worker. The deskless worker… The “Frontline worker”… on the other hand has received far less attention and investment from IT budgets. At Energize, we believe that big value and business will be unlocked by providing better digital tools to these Frontline workers.

Enter Beekeeper. Their goal is to “connect the unconnected” and the site shares exactly what this means…

“We wanted to help geographically distributed workforces and non-desk employees feel as if they were sitting right next to each other and to keep everyone in the company aligned. Companies with a large number of non-desk employees have a hard time keeping them in the loop with the rest of the organization. Beekeeper bridges this gap by connecting operational systems and communication channels within one secure platform that is accessible by mobile and desktop devices. You can customize it, schedule automated messages, establish communication streams, create and distribute employee surveys, and so much more. There are endless opportunities for making operations more simple and efficient, all while keeping your teams more engaged and happy to come to work.”

Beekeeper

This frontline focus is a passion for cofounders Cristian Grossmann and Flavio Pfaffhause. Like all great businesses, Beekeeper is trying to stand for more than themselves: they want to “own the problem” and be a source of truth as all companies look to bridge the desktop and frontline worker comms channel. After our initial investment we proactively led the next round and are already seeing signs that Beekeeper will be a pivotal communications software platform over the next decade.

As part of their effort to better be a source of truth for corporations that want to address their entire workforce, Beekeeper is hosting the first annual “Frontline Future” conference.

There will be a number of incredible attendees and presentations:

Whether you want to learn more about Beekeeper, their products, or how other firms are addressing distributed workforces… I recommend you register here: Link here

With my commute from “office” to home shrinking from a 25 minute train ride to about a 3.5 second hallway walk, my podcast listening is way down. But when one of the originals / greats from my sector of investing gives an interview, I find the time.

This is the case with Matt Ocko‘s recent interview with Azeem Azhar. Azeem runs a substack called Exponential View that bridges “the gap between two cultures—that of technology on one end, and humanities on the other—to provide a holistic understanding of our near future.” One of my favorite studies that he elevated. A few of his posts are about the energy transition, including a recent one about electric vehicle adoption.

Matt is the cofounder and Managing Partner of DataCollective, or DCVC for short. I consider DataCollective and Lux Capital two of the pioneers of the deeptech space… and Matt actually coined the term deeptech back in 1999. We are co-investors with DCVC in DroneDeploy and Jupiter Intelligence.

Given his history in the space and the success in the “deeptech” investing world, I encourage you all to go listen to the podcast.

Here are my top 5 takeaways:

1- The underlying theme is respect for the industry scope and entrepreneurs. These are hard problems that require a LOT to go right with leadership, team, timing, computational readiness, customer willingness. These problems take time and conviction. Matt and the DCVC team are steadfast in their support for these

2- The top deeptech companies have the following characteristics

• Machine learning approach enabling you to search the possibility space more effectively
• Massive automation in taking data outputs to final product / recommendation
• Virtuous upward cycle where the data and automation advantages reinforce each other. This results in upward cycle of efficacy and exponential downward cycle in terms of cost. Computational advantage that helps both sides of the computational (output, cost) equation

3- Best deeptech teams combine variety of scientific fields and disciplines. Doctors, scientists, engineers, real industry practitioners. And the leaders that bring them together need to be high integrity

4- Unit economics matter more than ever… just because it is deeptech doesn’t mean the traditional business metrics go out the window!

I love these few sentences:

“Computational advantage and the virtuous spiral of reduction in capex and opex must occur both for the company AND the customers. The startup has to reduce their own costs and the costs of the end product…. The companies that deliver great financial return and global utility have to have an output that is acceptable to regular, hardworking and often frightened, cranky, complex, idiosyncratic, short-attention span customers… so what these deeptech companies produce has to upend the existing trillion dollar industries without the customers having to perform unnatural acts to receive the benefits of innovation.”

5- Abundance vs. Scarcity as a mindset for the future. Abundance is believing we can use our technology to create surplus – deeptech technologies and their ability to create compounding positive effects to the upside…. while decreasing costs is a framework that can get us to that “abundance” mentality.

The link to the podcast can be found here.

The autonomous mobility segment is competitive… with deep pockets. Most of the well-known names like Waymo and Uber ATG are focused on complete, Level 5 (drive anywhere) autonomy. After reviewing the market, Energize made an investment into Optimus Ride in Q2 2019. Over the past 18 months I have had the pleasure of sitting on the Optimus Ride board of directors, and serving as Chairman of the company.

We made the investment because we felt the team and the technology had a secret: serving the “geofenced” L4 market to better define and limit the compute required in operating environment. The hypce cycle has peaked for Level 5 mass-autonomy. And now most of the players are looking to gain real customers and real revenue.

With that background I am excited to announce that Optimus signed up yet another site for their autonomous platform, with a repeat customer! The customer is Brookfield Properties, the fully-integrated global real estate business with over $450 billion in assets under management.

Here are some quotes:

“Optimus Ride has concentrated on delivering a turnkey autonomous, electric mobility service that provides safe and convenient mobility to campuses, corporations, and other mixed-use developments like Brookfield’s The Yards. With five successful deployments underway, we’ve broadened our focus to enhance the passenger experience and include new benefits for both our customers and their communities with the Opti Ride app,”

Optimus Ride CEO, Sean Harrington

“Brookfield Properties has experienced the value of the Optimus Ride autonomous, electric mobility service already at the Halley Rise development in Reston, VA. We’re excited to offer this service to our residents and tenants, and we jumped at the opportunity to add the Opti Ride app experience. Adding ride scheduling and reservation enhances the convenience with on-demand service to safely navigate the array of shopping and dining experiences and connect The Yards to neighborhoods like Capitol Hill and Barracks Row.”

Toby Millman, Senior Vice President, Development at Brookfield Properties

The article on the announcement can be found below.