Venturing On, with Conviction

Today’s guest blogger is Ross Shell, CEO and Founder of Red Idea Partners. Red Idea is a Boulder-based consulting and venture works firm and longtime friend of Green Alpha’s. Recently, Red Idea took the step of becoming equity partners in Green Alpha. We’re very excited about this new phase in Green Alpha’s evolution and we’re pleased to add Ross’ business, consulting and marketing expertise to our business and value proposition.

Garvin Jabusch, Green Alpha's Chief Investment Officer, recently asked me to write a blog explaining how Red Idea Partners, my venture firm, progressed toward becoming a partner in Green Alpha.

I was happy to oblige, as the investment conviction underlying my firm's decision was based on a variety of important factors:  logic, economics, observation, science, human and market behavior, history, and the old fashioned concept of getting in early rather than missing our seat on the proverbial bus.  While it had very little to do with the colors Red and Green being involved, but we did find that a bit entertaining!  Now, I did take a bit of heat amongst our advisors for my conviction toward this venture investment given becoming a stakeholder in a financial services firm is somewhat outside a standard-themed investment for us (i.e. Food, Beverage and Consumer Products).  But the logic of the opportunity, mixed with my own prior background working for a hedge fund and private equity fund manager, cinched it for me.  Further underlying our conviction was the fact The Sierra Club itself became the initial backer of Green Alpha several years ago.  This is a testament both to Green Alpha, and to the Club itself for its forward vision and courage—for getting behind real ways to flow capital to the best and brightest companies on the eco-efficient frontier.

Each generation, and each of us as human beings, have limits in how far beyond the "horizon" we can see with regard to predicting outcomes in our own personal lives, let alone the global financial markets or humanity's eventual plight.  About the only thing we know for sure, is that things will keep changing, good and bad things will keep happening, and humans will continue to innovate, problem-solve, and fight for their own survival.  As advanced as we have become, we’re still driven by many of the same fundamental instincts shared across the animal world—the most basic being our survival instinct.

As Americans who enjoy on average a far better standard of living than most of the world, many of us have also gotten used to the idea that the absolute constraints of the planet are still far beyond where we've stretched Mother Earth to date.  And, therefore, within the lifetimes of those alive today, it also seems reasonable that there just isn't much to worry about.  Right?  Well, “I don't know" is the right answer; no one truly does know where this might all come crashing down, but we're starting to understand the extrapolatory math and economics countering the potentially risky presumption that it's all still hunky dory.  

The planet's human population just crossed 7 billion last October.  The years 2000-2009 represented the warmest decade in recorded history. Climate-change skeptics aside, I don't know what the next decade will do, but seems to me what has already happened is worth paying attention to (particularly given the pattern seems to be continuing). The UN forecasts that Earth will reach a human population of nine billion by 2045, and that the planet lacks the ability to feed a population stretched beyond 10-15 billion.  Where the math gets a bit more daunting is looking backward, not forward.  For 200,000 years or say 10,000 generations of humans up until AD1000, the population stayed under 300 million, then gradually increased to 900 million or so by 1800.  From 1800-2012, however, the population has grown exponentially from less than a billion to over seven billion. Just think about that a little bit—only in the last couple hundred years out of 200,000 have we seen the planet grow from 300 million to 7 billion.  Take global warming completely out of the conversation, and we still have a population issue that entering completely unknown territory.  That fact is indisputable.  I could go on and on, with regard to sobering data and indicators, but I'll save all of that for Garvin or another blog.

OK, enough already. I'll get to the punchline.  Garvin wanted me to explain why we have become a partner in Green Alpha Advisors.  Well, the answer shouldn't surprise you, otherwise I have wandered far “off the reservation” in terms of what venture folks are supposed to do.  We invested in Green Alpha as a venture firm because we believe we will be financially well-rewarded for our risk and "over the horizon" vision.  Simple as that.  Now, we happen to feel good about the fact that Green Alpha is investing into all kinds of interesting public companies with eco-efficient business models at their core--but we didn't do it as a mission to save the world.  Our belief in our venture investment, and Green Alpha's own investment thesis, is based on recorded history's centuries of evidence that humans will do everything they can to save themselves.  We believe that the planet is indeed, sooner than we all may know, bumping up against its own ability to sustain, feed and support the human population.  But we don't think that governments, nation-states, universities, corporations, innovators and individuals are simply going to "go down without a fight."  On the contrary--we think that the growing issues of planet constraint, out of human necessity and our desire to survive, will create capital flow to those companies and innovators who are pushing new boundaries of sustainability--across energy, food, water, technology, shelter, transportation, healthcare, etc. And we believe this will happen not because we humans necessarily "want" these changes--we're as inventive as a species as we can be lazy--but because it’s becoming increasingly clear that we "have" to do so to survive and still prosper.

We believe that the entrepreneurs stirring up the winning solutions around eco-efficiency and sustainability will be heavily rewarded.  In 100 years, the greening of the global economy may provide us with the eco-equivalents of the likes of Edison, Ford, the Wright Brothers, Larry Page and Steve Jobs.  Red Idea Partners simply wants to be part of that because our mission is to make money for our firm's investors by spotting early the most promising growth companies—in this instance, Green Alpha as a firm itself!  So here's to Green Alpha managing $10 billion by 2022.  If they do, the humans on this planet will be that much farther along toward providing the necessary capital flow to the kinds of innovations that could keep this planet in balance and hospitable to the human race.  And we certainly don't mind if many of those companies get gobbled up by the old-line companies figuring out where all of this is headed--that usually creates rising share prices in Green Alpha’s portfolio holdings.  Watching Warren Buffett jump into solar this past fall plays right up the Green Alpha alley.

Onward and upward!  Thanks to those of you reading this blog, and particularly those of you who are Green Alpha customers in the firm’s green investment products.  Green Alpha will steadfastly do its best to keep focused on finding the best public stock investment opportunities in the earthly universe of eco-efficiency.

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