Episode 214: From Nuclear and Academia to VC with Rachel Slaybaugh, Principal at DCVC

Today’s guest is Rachel Slaybaugh, Principal at DCVC.

In her role, Rachel is focused on climate, sustainability, and energy investments. Before joining DCVC, Rachel was an Associate Professor of Nuclear Engineering at the University of California, Berkeley where she held leadership roles in several data science and entrepreneurship efforts. Concurrent to being a professor, Rachel was a Division Director at Lawrence Berkeley National Laboratory where she ran the Cyclotron Road Division. She served as a Program Director at the Department of Energy’s ARPA-E, where she created the nuclear fission program and managed the agriculture portfolio as well as solar and virtual reality teams. Rachel co-founded the Good Energy Collective and currently serves as Chair of the Board. Rachel received a B.S. in Nuclear Engineering from Penn State, where she served as a licensed nuclear reactor operator, and a M.S. and Ph.D. from University of Wisconsin–Madison in Nuclear Engineering and Engineering Physics. 

We have a wonderful discussion about Rachel's climate journey and how she has prioritized her professional pursuits.. We also talk about what Rachel has learned working in academia, government, early-stage innovation, and now as a venture capitalist. Additionally, the conversation touches on where VC and equity capital fit into the climate problem as well as key learnings from the last cleantech wave, and so much more. 

Enjoy the show!  

Jason Jacobs: Rachel, welcome to the show.

Rachel Slaybaugh: Great to be here, it's a delight after all this time.

Jason Jacobs: Yeah, well you... I can't remember exactly what number you were, but I reached out to you very early in my climate journey, which is coming up almost on four years at this point. And I also don't remember how we got connected, but what I remember is that we had a wonderful discussion. And then you were just so generous with your knowledge sharing, but also you made some really high-quality introductions and then those people became part of my tribe. And then they made introductions, so you, you may not realize it but you were kind of a, uh, key inflection point on the journey. An inflection point of one.

Rachel Slaybaugh: Well that is delightful to hear, and that's the goal is to connect the people so we can all go do bigger, better things and move this needle.

Jason Jacobs: I think either you were at RPE or you got to RPE soon after but whatever it was, you couldn't talk publicly at least on a show like this, or, or at least that's what I was told at the time. But I, I'm so excited to circle back with you and just do a deep dive both for the show but also just in general, because I, I don't think we've, we've ever done it.

Rachel Slaybaugh: Yeah, no, this is a real delight.

Jason Jacobs: You're a very hard person to put in a box, Rachel. I mean, I know you're, you're at DCVC now which is really exciting, but any one of the things that you've done is like a career for most people. And you've still got a lot of career left, so... PhD, and ARPA-E, and Good Energy Collective, and the Nuclear Innovation Bootcamp, and now a venture investor. And maybe just talk a little bit about what you're doing, but not too long because I want to know first how did you end up on the path that, that you've been on which is a, a, a tough one to keep up with.

Rachel Slaybaugh: Yeah, so maybe just briefly, DCVC is a deep tech firm that's been around for 10, 12 years. And has been doing climate tech investing all along, and is really interested in expanding their climate tech investing. So I joined to help continue to build what they're doing in climate. And I've been there three and a half months, so it's still pretty new. So I'm on the investment team so kind of the normal VC things: sourcing deals, diligencing deals, serving on boards, all that stuff.

Jason Jacobs: And we'll get more into DCVC later, but one clarifying question I just want to ask is given that climate is not a sector but climate affects every sector, when, when DCVC says climate investing, what does that mean from a sector standpoint?

Rachel Slaybaugh: Yeah, we have a pretty broad interpretation of things that are classically considered like generation technology all the way to what you would maybe call adaptation or, or consequences like water. We take a little bit of an expansive view that it's tackling the causes of climate change and also dealing with the impacts of climate change.

Jason Jacobs: When you look back at the arc of your career, are you a climate person? Or are you a nuclear person? Like, how do you think of yourself?

Rachel Slaybaugh: I think of myself as a climate person, so I got into nuclear energy for climate reasons. So when I was a freshman in college, and I was like, "You mean there's a large, existing, base load source of electricity like the size and shape of a coal plant that doesn't emit air pollution? Why don't we do that while all these other technologies have time to go scale? Like, we just have this solution right now that we can use that's already making 20% of our electricity, 10% globally."

I 100% picked nuclear for climate reasons. I mean, I was the type of kid when I was in like third grade I read, wrote an editorial to our local paper about recycling. I've just always been into this topic area?

Jason Jacobs: Why?

Rachel Slaybaugh: I care about the planet, and the future of humans, and the future of plants, and the future of animals. There's a... You know, if we sort of fundamentally change the ecosphere, things really change and it doesn't seem like it's going to go well. So it seemed like there are a lot of important problems out there to solve, but if the Earth doesn't function we can't really solve any of the other ones, either.

Jason Jacobs: When you were growing up and found yourself concerned about this area, did you think at the time that you'd end up working in it for a living?

Rachel Slaybaugh: You know, I didn't really know. I think when I was a kid I had the personal choices make a difference view, and I, it wasn't until later in high school and college that I realized this is what I wanted to do for my career.

Jason Jacobs: As you started coming to that realization, how did you think about where to anchor? And maybe talk a little bit about your entry point where things crossed from just caring to actually doing. Though you can argue that writing an editorial in third grade is doing, so maybe that's the answer. [laughs]

Rachel Slaybaugh: I think the do-... Right, when I was a kid the doing I thought I'd be doing was like, you know, writing letters, and boycotting products, and all sorts of those traditional tools. And it was in high school, it was kind of my interest in physics that started the ball rolling and shifted. So in high school I learned about special relativity and I was like, "Oh my God, reality works this way? What? I want to learn about this."

And then my uncle who's a physicist was like, "Maybe you should get a bachelor's degree in engineering so if you don't go to grad school you can get a job." And I was like, "Okay." [laughs] And then it turns out engineering was a much better fit, and that's how I got really sort of engaged in using science in an applied way to solve real world problems. And as I mentioned my freshman year I was like, "Oh, I can go help with climate change and energy in this really direct way."

Jason Jacobs: I think the next move was to go to grad school for PhD, is that right?

Rachel Slaybaugh: It looked very linear on paper, maybe didn't feel that way. But after my undergraduate degree at Penn State where I was a nuclear reactor operator, which was some of how I got, I don't know, the, the experience in, in nuclear, I went to the University of Wisconsin for graduate school also in nuclear engineering. Because by then I realized I really liked the much more applied disciplines.

Jason Jacobs: And when you did that, did you have the assumption at that time that academia might be a long-term home for you?

Rachel Slaybaugh: I didn't think I wanted to go into academia, I did my internships at national laboratories. When I entered graduate school I wanted to be a professor. In graduate school when you work a lot more closely with faculty, I was like, "Oh this job looks terrible, I don't want to do this." And then my professor was like, "No, no, no, no, no, it's like a lot better than you think. You should give it a chance." So my first job out of graduate school was at a laboratory, and then I did that for two years and, and then became a professor.

Jason Jacobs: How did you think about academia as a lever for change at the time, and how do you think about it now with the benefit of hindsight and all the experience that you've packed in in between? 

Rachel Slaybaugh:  Yeah, I think at the time I really liked to dive deep on problems, and there's sort of a this is the pathway. It's like the thing you see on TV as this really how you create ideas, and, you know, you educate students and you can sort of have this big impact. And then after I got into it... Which by, by the way my research area was computational methods, in particular for super computing. So I was like my technical interests were on the more theoretical side, so it didn't take that many years into being a professor where I realized the papers I was publishing would make a, a difference and were contributing to more efficient computational methods and things.

What was holding nuclear energy back was not high-performance super computing, and by engaging in startups, starting the Bootcamp, working at ARPA-E, working at Cyclotron Road, I realized that the, the timeline to impact that I wanted to have and the distance to impact I wanted to be much closer.

Jason Jacobs: And you said that you think of yourself as a climate person for a long time. You might have been a climate person, but you were doing heavily nuclear things. Did you evaluate different areas to have an impact on climate before you landed on nuclear, or did you just fall in love with it from the outset?

Rachel Slaybaugh: So it was a little bit of both. I, I don't think, you know, as a freshman I didn't really have the skills to do that deep of a dive perhaps. But I knew we needed to stop using fossil fuels, I knew wind and solar were deployed at very small levels and pretty expensive, and would eventually get to broader deployment but needed a long time. I knew hydro was pretty saturated in terms of deployment, and so that to me that left nuclear.

And then over the years, I think you don't stay a nuclear engineer without periodically questioning why you're still doing it. I really felt like it's an important option and we needed good people to stay in the field to try to make sure it was an option that is available. You know, we need all the tools in the tool box.

Jason Jacobs: And when you say you don't stay in nuclear without questioning why you're doing it, what do you mean by that? Why, why do you think that is?

Rachel Slaybaugh: Yeah, well so like, things change over time, right? Like, it's not like global, economic, but the context of how things were when I chose the field in 2002, like fracking changed everything. And the prices of electricity changed, and economic viability, and interest, the 2008 global recession changed everything. Like we went from, "Oh we're going to build 36 power plants in the 10 years," to, "We're building four in the United States," because a lot of economic indicators changed. [laughs]

And so it's sort of like, "Well, do I still think this field is relevant?" Like, "Why do I want to work on this?" Some of that was advanced reactors becoming a thing that were more viable and people were working on in kind of a different way to move forward in nuclear.

Jason Jacobs: And when you first started working in the field, did you catch a lot of flak from the people closest to you? Was it a, was it a controversial decision at all?

Rachel Slaybaugh: It wasn't among people close to me. Occasionally you meet people who are pretty anti-nuclear, I found mostly people are pretty nice about it and pretty curious. I didn't have a, a lot of personal opposition, but occasionally you meet people who are pretty strongly anti-nuclear and sometimes those people want to have a real conversation and sometimes they don't.

Jason Jacobs: Were you aware of that type of opposition before you made the decision to go into the field? And relatively, the classic objections that you hear again and again which I could rattle off. Um, and I'm sure you, you know them way better than I do. Did you kind of do the mental checklist and pressure test your own assumptions before you made the decision to head down this path?

 Rachel Slaybaugh: I think I didn't realize how culturally pervasive some of the anti-nuclear views were. I sort of... As you learned about nuclear energy, you learned about what some of the challenges are, but you also learn about what the solutions to those challenges are. For me from like an engineering and data-based perspective, it was like, "All right, there's a problem. Who knows the solution, and how do we make the solutions?"

Maybe a classic one is nuclear waste, we have lots of technical solutions for nuclear waste. There are many political barriers to implementing those solutions, and some of them are economic because some of the solutions are expensive. So it's a little like, "Okay, well how do we improve the technology so that it's economically viable?" Right? So that's some of the how I think about what the challenges are.

Jason Jacobs: When you first decided in 2002 to enter the field, how viable did you think that nuclear was at the time in terms of a potential solution/lever for change?

Rachel Slaybaugh: At the time, it was like huge upside. Nuclear energy was the cheapest form of electricity in the United States. People were talking about a carbon price. [laughs] There was real evidence that we were going to build a lot of nuclear, and that it was just a great choice. And again, I mentioned there were some... Fracking and a, and a global recession really changed some of those dynamics, but when I entered the field it was like super rosy.

Jason Jacobs: And in your mind when the tailwinds moved to headwinds, it sounds like it was largely due to macro conditions that didn't have to do with nuclear specifically changing that made it have a ha- harder road. Not necessarily because anything had changed with nuclear because, but because things changed either from a global economic standpoint or from an, from a best alternative standpoint given that fracking was so cheap.

Rachel Slaybaugh:  And I would say that was the case in sort of the late 2000's, early 2010's. The picture has, again, gotten a little more, has shifted again since then, but that's certainly at the time when all the... There were 36 combined license applications in at the Nuclear Regulatory Commission, and then they, pretty much all of them got withdrawn before anything happened that was not sort of macroeconomics.

Jason Jacobs: And as that was happening, how did it change how you thought about your future in the field, if at all?

Rachel Slaybaugh: I think by then I was more on the academic track, and so it... I was in graduate school, I was really focused on passing classes and, and doing research. So I, I was aware, but it wasn't like, "What am I personally going to do about it with my research." It was more just like, "How do I finish my PhD?" And I think it was really after graduate school when I started my career that I started thinking more about, "Okay a lot has changed in the field, what can I do to help deploy this clean energy technology?"

Jason Jacobs: And when you say clean energy technology, was it specifically nuclear that you were thinking about?

Rachel Slaybaugh: It certainly was then. So in graduate school I was engaged in the broader energy community, I co-founded the University of Wisconsin Energy Club. And again, it was more from a perspective of wanting nuclear to be a part of the broader clean energy conversation and thinking about how to, how do these energy technologies cooperate. Because there's just been a lot of infighting, and to me it just seemed like, "This is such a big problem, we need all of these solutions. And if we spend our time and energy fighting one another we're not really making progress towards the goal. The thing we need to do is get off of fossil fuel, we need to stop emitting all this carbon. What are the sol-... What is the collection of solutions?" And so graduate school is when I started engaging in that conversation, still from a very nuclear perspective.

Jason Jacobs: And it's interesting because whether you're focused on nuclear or any one thing, it seems like a delicate dance in terms of, "Look at your thing and the thing that you're closest to and the thing that you're working on, and seeing the potential it has. And, and how to help it reach its fullest form in a vacuum." But then there's the changing landscape around you, and as a climate person and not a nuclear person it must be hard to just step outside of your nuclear hat and look objectively with the macro conditions, and the alternatives, and the cost shifting, and the re- regulatory headwind shifting, and, and everything to, to look at when any one thing should play a big role and when any one thing should be part of a portfolio, o- or, or even not part of a, a portfolio.

Rachel Slaybaugh: Yeah, and I, and I would add to that that the answer's different in different countries. And it's even different in different regions, so it's like not only how do you think about that but how do you think about it where the conditions are, are different in so many places? Fortunately there are people who study this, and publish papers, and put out thought pieces about it. So I think for me some of what has helped is reading what other people write, and people who have models and their job is to do that systems thinking, that has been really helpful to, for me in terms of thinking about ho- how does this all fit together and what are the pieces and where do they go?

Jason Jacobs: And from where you sit today, what is your current view about the role that nuclear should play in the clean energy transition?

Rachel Slaybaugh: I think that in countries that are good at building sort of large mega projects, large light-water reactors, and those are the kinds of reactors that we have and build today, make a lot of sense. Because countries like Korea, the UAE, China, are pretty good at building those projects on time and on budget, and they actually make a lot of sense in those markets. They also typically are locations that are, are growing in large chunks of energy. In the U.S. and Western Europe, we're typically not so good at large mega projects in general sense. [laughs]

Adding radiation to large mega projects doesn't make them go better. We have not been very effective at building large reactors, and so that's where I think advanced reactors can really play a role because they are designed to address some of those issues that have made the reactors that we're building in the U.S. and Europe way over budget and way over schedule.

Jason Jacobs: Any sense as to why we've struggled in the U.S. and Europe to build these big mega projects on time and, and on budget?

Rachel Slaybaugh: Yeah, so there are some good reports out there that address... And so I, it's not an area I'm expert in, but some of the key reasons are we just structure projects with, like, not great project management. Like, we'll just have tons and tons of subcontractors, and you get projects in the U.S. where like the subcontractors are suing each other during the project. Like, it just... [laughs] It's not really a recipe for success.

You take the Bay Bridge in San Francisco, it was triple budget and triple schedule. These projects get mired in input and not effective project planning. One of the reactors we started building in the U.S., they started building before all the engineering designs were complete, and then they had to do a bunch of rework. Like, it just... Not really set up for success necessarily. And a- and again, this is a... People have studied this.

Jason Jacobs: The multiple subs and, uh, disorganization and stuff, I mean, to, to me, those are symptoms. What about the cause? And the reason I ask that is if, if we don't identify the cause then seems hopeless to try to think about what a solution might be. Un- unless we just say that, you know, "The U.S. and Europe just aren't going to be good at it and we don't know why, but we're just not going to try anymore."

Rachel Slaybaugh: So I, I think again there is some of the why, but it, my perspective is a little instead of trying to get this larger, more systemic thing to change, why don't we design solutions that avoid some of those causes? And so, like, avoiding design customization. So with those larger reactors you need to do a lot of redesign for every location, so if you make something that is smaller, that you can manufacture most of it in a factory, that is very standardized, then you can have sort of a cookie-cutter that takes a lot of that complexity out. That takes a lot of the redesign out so you're never starting a project with an incomplete design.

You're always starting with... Well except for the very first few, you're building more of them and you have sort of a rhythm. And you know exactly what is supposed to happen, and it's a repeatable process. The smaller, modular reactors are specifically designed to overcome what have been identified as those mega project barriers.

Jason Jacobs: If I'm hearing right, it sounds like earlier in your career you were very nuclear focused, and now you are looking at the climate challenge more holistically in terms of your purview. One, did I get that right? And two, if so, when and why was it that you decided to run that purview?

Rachel Slaybaugh: Yeah, th- that is right. And as I mentioned, sort of in, in grad school I started to be more broadly interested. And then my track with nuclear laboratory and professor I had to really focus really narrowly on my technical area, and I wasn't engaging in the broader community very much at all. And then I had the opportunity to get back to sort of that bigger impact picture when I started the Nuclear Innovation Bootcamp, but that broadening out more concretely started when I was at ARPA-E.

Part of why I went to ARPA-E was that not only did I get to think about what needs to happen in the nuclear energy sector but from a much higher level, much broader perspective, but ARPA-E works across energy technologies. So I got to really think about what is the cutting edge in all of these different areas and how to they fit together? So part of why I went to ARPA-E was to have the opportunity to do that broad thinking. And at ARPA-E you run your, your own programs in a sector, but you also... It's a, it's a fixed-term position, so people are coming and going all the time so you're managing teams from portfolios other people started, you're helping people create programs, so there's a lot of engagement in different technical areas.

So while I was there I started a fission program, but I also had a bunch of solar teams. And I ran the entire agriculture portfolio for a while. And I helped with workshops on cement. So it was really there that I had that ability to not only learn about, but also, like, mentor teams in a bunch of different areas.

Jason Jacobs: What is the charter of ARPA-E?

Rachel Slaybaugh: Yeah, it's pretty simple. It is: reduce reliance on energy imports. Create clean energy broadly. And it's U.S. technical excellence. It's basically anything in the energy ecosystem. Improving technology, making sure the U.S. is energy independent, making sure we have really commercially viable technologies.

Jason Jacobs: And what types of activities does ARPA-E do in order to help bring those things about?

Rachel Slaybaugh: Yeah, so we run funding programs... Er, we, I don't work there anymore. [laughs] ARPA-E runs funding programs. And so the job of a program director, my, my job, is program creation, and then program management. And they're both sort of... They both take kind of a lot of time and energy. So in program creation you go figure out in a sector how can you move the needle for tens of millions of dollars? Our typical program size is 30 to $50 million.

What is holding the field back? Where are there technical solutions that are in development, but not at all ready for commercialization yet? There are some idea that could help solve these problems and a community of people that can be formed, so it's really a, an intervention in a field to go take some early technologies and really catapult them forward to try to change the sector.

Jason Jacobs: And that, that's primarily with non-dilutive funding?

Rachel Slaybaugh: It's non-diluted funding. It has some cost share requirements, but it's, it's cooperative research agreement. But, yeah, it's funding from the government.

Jason Jacobs: And is it primarily early stage companies but that are, that are companies already?

Rachel Slaybaugh: It's a big mix. The biggest share goes to university-led teams, and then it's a pretty even mix between startups, mid-sized companies, and then what are typically, like, innovation teams instart- inside of large companies. So it can go, it can go to anybody. And many of the teams are multi-party, so certainly a nuclear... Almost every team I've funded had a lab, a university, and a company, because that's sort of the nature of how things are in nuclear. So it's very commercialization focused, but a lot of times it's like getting ideas out of the universities is part of it.

Jason Jacobs: And I'll ask a really broad, open-ended question, but what role did you believe that government had to play in addressing the cl- climate challenge heading into ARPA-E? And then how has that evolved if at all today?

Rachel Slaybaugh: Certainly heading into ARPA-E I didn't understand the differences between all of the types of government funding and the way the different agencies worked. So I think I just thought like, "Oh, the government funds research and should work towards societal good." You know, it was like a little bit hand wavy, and as a recipient of government grants, very tactical. But after going to ARPA-E, I think there's an important role for basic science.

We need to keep investing in these early stage ideas that eventually become the game-changers of the future. You also need... I, I think of ARPA-E as like the venture capital of the government, it's catalytic funding where you bring a deeply technical focus paired with a commercialization-oriented focus to try and really accelerate some of these technologies towards really, like, moving a sector in a commercialization sense. And then I, I'm really glad that there's more focus on deployment from the government, because I do think there's a real role to correct, [laughs], if there's something that you say society needs but there's not a clear actor to financially benefit from it, or there's some breakdowns in the, in the reasons things are deployed, or the, the risk is really high.

Things like the Loan Program Office. I'm really excited they're starting... The Department of Energy has a new Office of Deployment to, like, manage all these deployment-oriented programs. That, I think that is an important government role. 

Jason Jacobs: What about policy? Where should policy fit in? Where will policy fit in? And how much interaction is there between the research side of government and the policy side of government?

Rachel Slaybaugh: Yeah, they're really... I don't know if co-equal is the right thing, but you want, they need to be iterative, right? You need policy to help set the direction of what are the goals we're working towards, and you need the research to make the job of the policy makers easier. So you can say we want a price on carbon, and, [laughs], you also need technology to come bring the technologies that can remove carbon down so that you can actually have that price of carbon make some sense.

So I, I kind of view the job of a lot of the research programs is to make the policy makers have an easier time, [laughs], and the job of the policy makers is also to help enable the technology development. So it's really a co-created environment.

Jason Jacobs: Given that you have been working with commercializing these young, potentially breakthrough technologies in different capacities whether it be in government with ARPA-E or at Cyclotron Road, do you have a view on the best way to bring a technology out of a lab? And relatively, what barriers are there that make it difficult to do so?

Rachel Slaybaugh: I don't know if there's a best way, I think there are a lot of paths forward. So some of the barriers are personnel, so something that we saw especially in the national labs is you would have some pretty creative ideas but the person coming up with the ideas is a long-term researcher who wants to keep doing research. And so there's not really anyone to hand it off to to go commercialize the idea. And similarly, in a, in a university environment, maybe the professor's going to be a part of the founding team or whatever, but the professor is probably going to stay a professor so you really need a postdoc or a late stage grad student who is really involved and actually wants to go run a company to go take these ideas forward.

So getting those early ideas out of labs and universities, some of the biggest barriers is just having the right person to run a company be able to find the idea and move it forward. Because a lot of times the people who are doing the research and have these brilliant ideas aren't necessarily the people who should be running the company. Finding... And there's, you know, some programs out there that try to do that matching, but it's the handing the idea forward that is, I think, some of the biggest barrier.

And then also, it's really hard to find the funding, right? Like, starting a company can feel really scary. And this is... I know you've thought a lot about this, like the people who have the ability to go, like, take the risk to start a company, they either need to have a big security net, they need to have funding from somewhere, until they can get enough traction to go raise funding. [laughs] And so there's some real barriers around being able to take that risk.

Jason Jacobs: With a climate hat on... We were just talking about taking many different kinds of technologies out of a lab, but earlier in the discussion we were talking about nuclear that's been around a long time. And how much just blocking, tackling needs to get done and what a grind it is to take this existing technology and get it deployed at, at big scale. There's one school of thought that says the more shots I pull the better, and I think the critics would say, "Yeah but we already have stuff that works, and this other stuff is noise. It's a distraction, and it should get out of the way so that we can deploy what we've got." With your climate hat on, how do you think about that tension?

Rachel Slaybaugh: I think it's not an either-or, I think it's a yes-and. I think we need so much electricity to not only replace fossil fuels but to grow the amount of electricity that we are producing if we're going to electrify everything, it is like, "Yes, and the kitchen sink. We need all of the things." We need the things that we have today, and doing the things that we have today is not an excuse for developing the tools that we are going to need tomorrow.

Large... You know, to go with nuclear, like large existing LWRs, we have the supply chain, we have the knowhow. If you can put a gigawatt of electricity on the grid in four to five years, that works. [laughs] Also, advanced reactors have some real benefits, you have ones that can be used to recycle nuclear waste. You have ones that operate at higher temperatures that you can use for process heat. Like, there, they have... It's easier and cheaper to make them safe so you have some real benefits around where you can site them. They come in different sizes so they can have different applications.

Like, should we stop building clean energy right now to wait until those come online? No. [laughs] Should we stop developing those because we have something that works right now? No. Like, you wouldn't do that in any other sector, why would you do it in energy? It's yes-and.

Jason Jacobs: When it comes to having the expertise to operate or, or even invest, for that matter, in these sectors... You know, climate affects everything, so it, it is more of a generalist hat, whereas each sector has it's own set of expertise as you know. What role do you think that generalist investors should play? And, and where does the sector expertise come in? Ho- how much does it matter?

Rachel Slaybaugh:  Well it's a good, it's a good question. I think for a lot of the technologies in climate, they do have sufficient complexity that you want somebody technical there, but it's not necessarily the case that every single investor has to have that expertise, right? That's why you have the syndicate. You can have people who really specialize in being deeper in technical areas, in doing the diligence, and you can have more general investors who need to do some of their own research and understand what is going on but maybe don't have to have that same expertise.

But I, I would say if you have, like, a round of investors in a technology where nobody has any technical wherewithal, that's, like, probably not a good sign. So yeah, I think this is a, it's a community problem, it needs a community approach to solutions. And that's, again, kind of the benefit of having a syndicate of investors is different people bring different relationships and different kinds of expertise, so some of the more general investors might bring different commercialization relationships. So it takes a village.

Jason Jacobs: And when it comes to Bits and Atoms, with an impact hat on, how should one think about where the biggest impact is to be had for climate? And then same question in terms of dollars and cents. Is there a inverse relationship between impact and profit?

Rachel Slaybaugh: So I don't think so. And that, it's certainly not a fundamental relationship, right? There's no, there's no law in physics that says impact and profit are opposed to one another. And I think there's a lot of evidence to say that they're aligned, but it takes being considerate about what you're doing. And I think some of what's really exciting about climate tech investing right now is that vision of we can make a big difference and create profitable companies is lifting all boats.

And it, it goes back to that how do you make a policy maker's job easier? It's not by making a company that isn't economically viable. How do you get technologies adopted? It's not by making something that isn't economically viable. If you actually want these things to go be implemented and stay implemented, they have to also make sense.

Jason Jacobs: With the benefit of hindsight, what's your postmortem on the last cleantech wave? What happened there? Was it a, was it a success? Was it a failure? What were the key lessons that were learned? How do you think about it and, and which aspects of it should it form heading into this, presumably this next wave?

 Rachel Slaybaugh: I think from cleantech 1.0, there were some real failures. There were some real successes. I think part of it is remembering that when you're dealing with atoms in particular, sometimes the companies take longer to build. So some of the things that it wasn't obvious for a while that they were real winners, sometimes the returns take a little longer. And I'm not saying like... We all need patient capital, but I think it wasn't evident what some of the victories for cleantech 1.0 were, it took a little time.

Keeping in mind that when we're investing, we need to figure out what return timeline we're really targeting. Fortunately there are enough companies now you could invest sort of mid-stage and get, and get quicker returns. I think there were some places where there were really big capital requirements where the market wasn't very certain on the other side. I mean, it seems like biofuels is kind of the biggest failing out of cleantech 1.0, and those are big, capital-intensive. It took a lot of capital for a somewhat uncertain market. I think partly there are more participants now, I think there's more government funding now to help take some of that capital risk.

I think there's more assessment about what are the real paths forward. I think there's also more appetite in the commercial sector, [laughs], for a lot of these technologies. I think some lessons are around being clear about what timeline you're shooting for, um, with your capital. And being really considerate about is this an appropriate capital risk for the type of money you're investing?

Jason Jacobs:  What is the overlap on the Venn diagram between the most impactful climate innovation and, fit with traditional venture capital?

Rachel Slaybaugh:  You know, I think, I think it's growing. And this is where I'd be curious about your opinion since you've been sort of talking in this sector a lot more about how traditional venture sees it. Because I've spent a lot more time with people because of my job at ARPA-E and Cyclotron Road I know the climate investors a lot more, and I'm just now starting to build those relationships with the more general investors. And it, it seems like there's hesitance, and they're most interested in things that are poppy in the news that may not necessarily be the most impactful or the, or the best commercial returns. So I think there's still some education or some conversation to be had there. I think there's some, I think it's growing. And I think there's more collaboration to be done to increase that Venn diagram. [laughs]

Jason Jacobs: One reason I asked is that... I mean, you mentioned that ARPA-E is catalytic capital, for example. And there's, there's other examples of catalytic capital whether it's family office, or Cyclotron Road, or ActiveAide, or Prime Coalition, or, or... I guess, Azolla, that now their investing arm is called. But venture capital decidedly is not catalytic capital. It's, it's not their job, they're representing people's 401[k]s, their pensions, retirees. The capital needs to generate the best returns, that the fiduciary responsibility of the, of the limited partners that are, that are investing in these funds. And given that, how impactful can that capital be given that it, it sounds like the catalytic capital is where the action is from an impact standpoint? I- i- am I hearing that right?

Rachel Slaybaugh: I guess I don't agree with that, because impact investing and climate investing are not necessarily the same thing, right? So DCVC, deep tech their whole existence, climate tech all along the way. Expanding our focus in climate tech, we're not an impact investor, right? We are a making money back for our funds because the people who fund us are hospitals and pension funds, right? Like, we have to... Our job is to give them a big return on investment so that they can run their hospitals and fund those retirement accounts. Like, that's an imperative and we take it very seriously. And, there are lots of climate companies that are a good deal and will make lots of money and have made lots of money. And so I think part of why I'm so excited to be about DCVC is because our thesis is you can do good for the world in a traditional venture model, and in fact we should. That is the right way to do business. And I would say maybe to add on to that I love that that's our team. In pitches from climate companies, nobody has to explain to our team like why recycling plastics is important. Like, we know why it's important, we're more concerned about the details of your technology and the details of your business plan.

Jason Jacobs: When it comes to meeting your impact threshold to the extent that you have one, how do you know? Is there, is it more qualitative? Is it quantitative? BEV for example has a [inaudible 00:42:17] threshold. Um, ho- is there, what does the filter look like?

Rachel Slaybaugh: We don't have a, a numerical threshold like that in part... I mean, we are traditional venture capitalists, but in part, you know, we invest in a lot of early stage companies, and for us it feels like doing those calculations when a company changes and evolves so much, it's a little, it's speculative and unreliable so we don't want to over-force calculations and then the company changes and it... We don't use metrics like that. We use, "Is this going to be a good company? Is it doing good in the world? Is it working on a sector that matters?"

Jason Jacobs:  Uh-huh. So like an LCA for, LCA for example, isn't as important given the stage?

Rachel Slaybaugh: That's right.

Jason Jacobs: What about risk? What types of risk are acceptable to take on? And wh- what types of risk, if any, do you steer clear of as a rule?

Rachel Slaybaugh: Yeah so we pre-seed investments, though we'll take pretty substantial technical risk. And the more technical risk, the more... Well I guess we always really... There's never a time when we don't really need to believe in the team, so we're, we're willing to take pretty significant technical risk. And then the later stage of the investment, the more it needs to really only be whatever the engineering scale up risk is because that's there in many technologies. And some commercialization risk. But we will not invest in things that are... We won't invest in something that requires a carbon market, for example, because that's still pretty speculative. And if your business case needs a carbon market to make sense, we won't take that risk. We will happily take the additional upside of any carbon markets that exist, but we're not going to rely on that. Similarly, we will not rely on policies to be in place for your technology's business plan, like it needs to be... You can have companies that are independently adopting something because they have ESG goals, but if it's something like that that is so changeable, that's outside our mandate.

Jason Jacobs: What about time horizon to exit? Do you think... And, and I, I know we not be from a DCVC specific standpoint, but if, should climate funds have traditionally fund lives? Or do the longer life funds make sense?

Rachel Slaybaugh: I think there's a mixed answer. I think from DCVC's perspective, we're going to stick with a traditional fund life because that's our model. I think there's a role for that. I think having longer funds in the ecosystem like BEV is a good compliment, and that means that they can take bets that we wouldn't take. And that's useful. There are also different types of capital, venture doesn't have to be the model for every climate investment, right? Like, you can have other, other types of capital with appropriately more patience come in. And so I think there's some of a... The venture model isn't the right model for everything, and isn't, isn't the right type of capital for everything. So for us, the ten year timeline is what we're going to stick with, but it doesn't have to be everybody's answer.

Jason Jacobs: And since you now have a venture capital hat but you've had a climate hat consistently, what is it that led you to believe that venture capital was the right place to anchor in this next phase of your career with your climate hat on?

Rachel Slaybaugh: Part of it is the nature of the job, it fits my, what I like to do a lot. It's very dynamic, you're constantly learning across sectors, you're getting to see really exciting things, and you're getting to get, like, hands-on with companies and help them. So it has all the elements that I loved at my job at ARPA-E, so that sort of indicated that I personally would like the job. There was also... I've spent so much time from the public side supporting these companies that were raising venture money, I kind of wanted to get on the other side of the fence. I also think, honestly, people with technical backgrounds, we shouldn't be the only people in venture investing, [laughs], but I think it's valuable to have more of us there. And that, and fortunately the community seems to agree as well.

Jason Jacobs: And going back to something you said before about how we want to get off fossil fuels as quickly as we can, how do you think about the fossil fuel companies, Big Oil, what role do you envision that they should and will play in the clean energy transition? Are they necessary partners, should we trust them? Should we be fleeing, and devastating, and trying to take them down? Or should we be sitting at the same table with them and trying to be as good of partners as we can?

Rachel Slaybaugh: Yeah, I think anytime you're in a trying to take someone down stance you're probably going to end up using a lot of resources on a fight, and maybe that's not the best use of resources. So I, as much as maybe personally I would lie like, "Ah, you guys are evil!" Like, of course they're not. They're human beings who have jobs who are trying to make a living, and ma- made their choice to live in a different environment. And I, I think we, the more that we can find ways to pivot their business lines and use any assets, certainly use their expertise and find a path forward together. And like, "Can we do synfuel creation? Can we use your drilling expertise for geothermal?" There's a lot of skills. "Can we use your operations expertise?" I think it's really more of a creating the future together. It seems likely to go better and faster if we work together. [laughs]

Jason Jacobs: What type of urgency should we be proceeding with? Do you use the words climate emergency, for example, does that term resonates with you? And do we, are we really, you know, short on time where things are going to get super ugly? So that's kind of one question, and the follow up then is, uh, if so, are we better to work with what we've got and try to increment our way to where we need to go? Or, or do we have to by necessity step outside of the existing system and find another way if we have any chance of success?

Rachel Slaybaugh: Do I think there's a... Right, you have to tie all these answers to reality. So do I think climate change is a, is a sort of urgent imperative? I, I do.

Jason Jacobs: Is it existential?

Rachel Slaybaugh: I personally think it's existential, but that's, that's a personal view. It governs many of my choices. I'm also a hypocrite like everybody else, I joke that the goal of my career is to make up for the impact of flying in my career. [laughs] Um, do I wish that we could really shift systems rapidly and radically, and just, like, make this quick and easy and really keep warming down and not have that much disturbance? I do. Do I think that's what's going to happen? Probably not. We have billions of people on the planet and trillions of dollars in embedded infrastructure, you just can't turn systems that quickly. And so I think a lot of the goal is to try to figure out how can we change as quickly as we can, recognizing that it just, like... I mean how long does it take to get a new installation, like, permanent? So as much as we can remove the friction in this system so that we can make changes in a way that brings people along, that's how I think about it. And so tying it back to why venture capital, if the goal is to make really economically compelling companies, it's easier to make those transitions. The more you can just make the right decision make sense, the faster those decisions happen. 

Jason Jacobs: That leads to, to another, more existential type of question which is can the clean energy transition be successful in a democracy?

Rachel Slaybaugh: I don't know if I'm going to wade into that question. I guess the, it's the you go to battle with the army you have? Like, it has to be. [laughs] Um...

Jason Jacobs: Yeah. I just wonder, I mean, is that, is that why other places can build, can build projects faster because they can just have edicts and stuff gets done?

Rachel Slaybaugh: I mean, different systems work differently. Like, I would say it's not just that we have a democracy, it's that we have, in the United States we have an incredibly diverse country. We have over 300 million people, we're very spread out. We have a lot of different geographies, we... It's not just that we're a democracy, it's that we're a democracy with incredible diversity. And so there's a lot of interests, and there's a lot of perspectives. People care about a lot of different things, so I, I don't know that it's fundamental to democracy, I think it's just we're in a very large system. Places that can move really quickly often are much smaller or have a different political system. And so it, it doesn't mean that we can't do it, it just means we have different considerations.

Jason Jacobs: Given how important regulation is, do you think it's possible to have impactful climate legislation in the polarized political climate that we are currently in?

Rachel Slaybaugh: I think evidence would show we're not making great progress there, but I don't know what it will take. But on the other hand, things still keep happening. So I served in the Department of Energy during the Trump administration, which I wasn't really expecting to do but that's what happened, and the budget of ARPA-E kept increasing. Because the weirdness of politics, the Trump administration trying to shut down ARPA-E cause Congress to become really supportive of ARPA-E so our budget like doubled. And so, you just never know. It's a w-, it's a weird system. But I don't know that this is a very clear answer but I guess. 

Jason Jacobs: It's, but there's all these chicken and eggs, right? It's like, "Gosh we really need regulation and so we need to focus there." It's like, "But we're obviously not making progress there so we need to find other ways." It's like, "But by focusing on these other places it takes our eye off the ball on regulation." Right? You could say the same thing with consumerism, if we just changed our habits than usage would go down. It's like, "Well we're not just going to wake up magically and change our habits. Well yeah, that's why we need to make it a conservative priority." And so you just end up chasing your own tail around. It's not really a question, I don't know what the answer is I'm just kind of-

Rachel Slaybaugh: Yeah.

Jason Jacobs: ... venting, I guess.

Rachel Slaybaugh: Yeah, no, it i-, it is really frustrating. And I think some of what helps is communication across people working in these different sectors. I mean, something that I think helps in what I am doing now is because I've spent time in D.C. and I have a relationship with a lot of the policy and nonprofit groups who are working to make this change, I can talk with them about what my companies are doing. I can send them companies who are working in different relevant spaces to have that very direct conversation…

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