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Influencers with Andy Serwer: Tom Steyer

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In this episode of Influencers, Andy is joined by Galvanize Climate Solutions Co-Chair, Tom Steyer as they discuss sustainable investing and why the private sector must ‘step-up’ to solve climate change.

Video transcript

[MUSIC PLAYING]

ANDY SERWER: Tom Steyer is a former hedge fund manager turned presidential candidate. And for many years, he's been one of the loudest voices on climate change. Now, Steyer is putting his money where his mouth is, launching a climate-focused investment fund to address the biggest problem facing our planet today.

TOM STEYER: This is about changing the world, not changing it at the edges.

ANDY SERWER: In this episode of "Influencers,", I'm joined by Tom Steyer as we discuss sustainable investing, the COP26 Summit in Glasgow, and why he says the private sector must step up to solve climate change.

[MUSIC PLAYING]

Hello, everyone, and welcome to "Influencers." I'm Andy Serwer. And welcome to our guest Tom Steyer, former hedge fund manager and 2020 Democratic presidential nominee. He recently launched an environmental investment platform called Galvanize Climate Solutions. Tom, welcome. Nice to see you.

TOM STEYER: Andy, it's nice to see you again too.

ANDY SERWER: So let's talk about Galvanize Climate Solutions. And tell us exactly what it is and what you're trying to accomplish here.

TOM STEYER: Well, we're at a point, Andy, where I believe the private sector has to step up and execute the climate solutions that we all need to have a safe and healthy planet. And Galvanize Climate Solutions is designed to be a mission-driven investment platform, comprehensive, meaning to invest across the board, from the smallest investments to the biggest projects, and to really use it to make substantive change in terms of the kinds of companies and projects that will be scalable solutions for a huge global problem, but also a new kind of capitalism, where we're calling it movement capitalism, where we have a mission and we use the capitalist system itself to organize other investors, other companies, and to work with policymakers to make sure that as a society, we come to grips with a huge global problem and, together, solve it.

ANDY SERWER: So it is, essentially, a venture capital fund at its core. And your money in it, obviously-- are you taking money from outside investors?

TOM STEYER: Well, let me just expand a little bit on what you just said, Andy.

ANDY SERWER: Yeah.

TOM STEYER: When we say we want to invest comprehensively, that does include investing in the things that are normally considered venture capital-- new technologies, new startups, entrepreneurial ventures-- absolutely. But this is a platform where we want to invest in every part of the solution. So that would mean if there's a huge project to build clean energy in a developing country, that is also something that we would like to be able to address.

That is definitely not venture capital. You know, in the investing world, which I lived in as a professional for more than three decades, the people allocate money, institutions allocate money to different parts of investing that have different sizes, different returns, different risks, and different time frames. And our platform is designed to address all of those, but with a mission focus about coming up with scalable solutions to a global problem at the speed with which the problem itself demands. So it's a lot more than you just said, because we're looking to a much bigger solution, in effect, and trying to be comprehensive in what we do.

ANDY SERWER: Got it. OK. But you do have other partners who are involved. Maybe you could talk about them a little bit, A. And then B, I'd love to understand how you're going to decide how to deploy the capital.

TOM STEYER: Sure. Well, let me talk for a second about the people. The person who is starting this investment company with me is somebody who's been my friend and partner for more than 40 years. Katie Hall is someone who worked with me in my first job out of college, somebody who also went to the same business school, who was a groomsman in my wedding wearing a black cocktail dress, who was my first partner at Farallon Capital, and somebody who she and her husband have been close friends for a really, really long time.

And so Katie started a business on her own, which she's grown, called Hall Capital, and she's somebody, we together have started this company. And we're hiring people and have hired people who are investment professionals with proven records, but also who look very different from what you think of as a typical Wall Street firm. You know, we really believe that the best decisions are made by a diverse group of people.

They're going to have to be a lot younger. This is about changing the world, not changing it at the edges, but actually coming up with a new clean, sustainable, healthy economy. And we know that a lot of those ideas, most of those ideas are coming from young people. So we're going to be hiring a very diverse young group of people who we expect will be thinking about this virtually for their entire lives and are going to have the kind of disruptive ideas that, in fact, we need to solve these problems.

ANDY SERWER: Marc Benioff's Time Ventures is involved, and also Laurene Powell Jobs has invested. Is that correct?

TOM STEYER: Yes. And at the company level, we have a small group of strategic investors, basically to fund the company so that we can build the different teams that we need to address the different sectors of investment that will provide the climate solutions that we believe are necessary to solve this problem. And let me say this, Andy-- there's a lot of money coming into this space.

This is an area and a concern, the climate crisis, that I've been working on for more than 15 years. We're at a point in time, I believe, a change, a transition-- where we're going from, from an investment standpoint, there's an old saying-- strategy is easy, execution is hard. We spent a long time as a country and as a globe talking about strategy and really talking about the kind of policy framework that's necessary for us to address these problems.

But now, all the science tells us, all the physical evidence of the world is telling us that now we need speed too. Strategy is easy, execution is hard. It's time for execution. And Galvanize Climate Solutions is about coming up with solutions, coming up with scale, working with other investors and companies to make sure that the growth engine, that the actual execution operation of our society and this globe gets to work on this now and solves it, which is what we're intent on doing.

ANDY SERWER: So let me follow up on that deploying capital question, though, Tom. So what would you look for? I mean, you talk about everything from, say, a typical startup in Silicon Valley to maybe a power plant in India. I mean, the whole range would be something that, you know, diverse, so how would you decide what to put your money in?

TOM STEYER: Well, I think the way that this works in the investing world, Andy, is different investment strategies call for different investing vehicles. And so if you're going to set up, if you're going to try and address the problem-- let's just take the problem about new technologies for clean energy. That is going to take a certain kind of money with certain risk profiles, certain time frames, and specific investors who want those risks, want those returns, and accept those frames.

So that would be an investment vehicle. If you're going to address a project finance in a developing country, that is a different amount of money. It's a completely different investment process with different investment professionals who have expertise in that. And so what we're really saying is, as a company, we want to be comprehensive, but we understand that in order to do that, we're going to have to have different teams, we're going to have to look at different problems separately, but we also believe that being comprehensive, that understanding all the different levels of investment about climate solutions will inform each other.

And so that, in fact, we are a company, there will be cross-fertilization. And that's the kind of opportunity and purpose-driven company that we're trying to create.

ANDY SERWER: And to be clear, this isn't philanthropy. I mean, you're anticipating getting a return on your investment and effecting change at the same time.

TOM STEYER: We believe that coming up with the solutions to a huge problem means you're going to have to create a huge solution, which means an impactful, huge company which will create a great investment opportunity. Having said that, 25% of the ownership of this company will be dedicated to going back on a charitable basis, non-profit basis into that ecosystem of climate solutions and climate justice-- basically saying, we absolutely acknowledge our responsibility to be part of this solution in and of itself.

We believe it creates a great investment opportunity for investors. We know we have to have a company that can compensate young professionals who are mission-driven, but also need to be paid. But as a company, we're saying this is something where we acknowledge our need to be a contributing part of this solution from ourselves, as well as from our investing activities.

ANDY SERWER: Right. I mean, the fund's sort of based on your notion of movement capitalism, which you've described as emerging entrepreneurship with global activism. But some activists point to capitalism itself as part of the problem that led to climate change. So is that a contradiction in terms? Are they wrong?

TOM STEYER: I don't think they're wrong at all, Andy. I mean, I think there's no question that in the framework under which we were working, capitalism has taken us to the brink of climate disaster. And I believe that unless-- I think that governments around the world are actively changing. We're looking at an international conference in Glasgow, starting within a month, where every country in the world is talking about what they can do to get to a net zero climate emissions.

We need a different framework. But beyond that, the entrepreneurship, the energy, the competitiveness of the capitalist system we need to come up with these solutions. But the reason I call it movement capitalism is that it implies that it's mission-driven-- that you're not blindly making investments based only on return, but that, in fact, at the same time, you're measuring impact, you're aware of your responsibilities to society, and that is a change.

I think we're explicitly calling that out that we want to cooperate and coordinate with other people who feel the same way. But I think you're seeing this across society-- that the people who are willing to be destructive in their pursuit of a dollar are being called out, that that's going to be very, very difficult to operate that way. And we're moving to a capitalism that has to have an awareness of its impact on society. Because otherwise, as you can see specifically in climate, it can go over the edge and has really brought us to the brink of a true global crisis that we need to solve.

ANDY SERWER: What role should government play-- regulation, investment incentives-- and President Biden has set the goal of decarbonizing the power sector by 2035 and the whole US economy by 2050. Is this kind of thing achievable, ambitious enough? What's your take?

TOM STEYER: Well, first of all, it is achievable. The government's role is to set the ground rules, to set up the way the economy works. And let me start with a very simple statement, which is this-- there's no such thing as a free market. That is a myth. The idea that there are no rules and that we exist in a state of nature in the jungle hacking at each other with machetes, that's just not true. That's never been true.

Every market from the beginning has had rules. When does it open? Who gets to set up their stand where? In the United States of America, think about a very simple question-- what's the minimum wage? Are you allowed to employ a 12-year-old for 48 hours a week? There have been rules in our society about the relationships between employers and employees since the very beginning.

So the idea that there's a free market is not true. The government's job is to set those rules in a way that drives towards the benefit of society at large and to let businesses work within those rules to try and accomplish, to bring the spirit, and hard work, and entrepreneurship, and foresight to accomplish what society itself needs. That's what's the government's job.

That's what I believe the Biden administration is working very hard to do. I think that they're aware exactly of that role. And I think that they will succeed and they have to succeed.

ANDY SERWER: I want to ask you kind of a philosophical question, Tom. And you're good at that. I mean, I know--

[TOM LAUGHS]

So how much daily life, in advanced economies, let's say the United States, will have to change? Or will we be able to sustain more or less what we do now with climate neutral alternatives?

TOM STEYER: Well, let me say this-- this is not going to be an eat your gruel moment. We're going to change, but we always change. It's going to be better. I mean, let's start for a second with just the most obvious first thing we need to do, which is to generate electricity cleanly-- get rid of coal plants, get rid of natural gas plants, move to things that don't emit greenhouse gases.

OK, we can do that cheaper than using coal or natural gas. This is not a question of, oh, you're [INAUDIBLE], your bills have to go up. Baloney. The fact of the matter is technology is going to let us do that cheaper, better, without making people sick, without giving people asthma, and without emitting greenhouse gases.

So just very simply, is it going to change? Heck yes. Is it going to be better? Also heck yes on every measure. When we look at the move in terms of transportation-- you know, these are just the things that Americans are already thinking about-- electric cars. Electric cars are going to be cheaper. Electric cars are going to have better pickup. It's going to be a better ride. This is going to make people's lives better.

The technology-- we have got to go back to the idea of thinking that we're smart and we get things done. That's the truth. This is a country that is smart and we get things done. We have a problem. We are going to solve that problem, and we're going to do it in a way that makes people's lives substantially better in multiple ways.

And what we have to do is get down to work, and execute that, and stop arguing about whether we have to do it, because that argument is over. The only argument now is how do we do it best? What are the ideas that we come up with? And let's get on it.

ANDY SERWER: See, I knew you can handle the philosophical question.

[TOM LAUGHS]

Did just fine. All right, let me ask you to drill down on a couple of different businesses. Bill Gates is obviously concerned about climate as well. I wonder if you talked to him, A. And B, he's talked about expanding nuclear power and you have been against that. I thought you opposed an expansion of it.

TOM STEYER: No, let me say this, Andy. What I have said consistently about nuclear power is this-- I'm agnostic. Nuclear power emits no greenhouse gases. The issue has been, is it cheap? Do you have nuclear waste that is toxic, and that lasts for 100,000 years, and you have no disposal plan for that waste? And is there a significant chance of a nuclear disaster?

Those are just facts. If it's cheap, if there's no waste that we need to dispose of, and then it's safe-- great. In fact, you know, there are people, including Bill, who's been working on the next generation, who've been working on this for decades. What's proved to be true in the United States is we haven't come up with nuclear power that can compete with solar and wind.

Take away the issues about safety and the issues about having to dispose of waste-- extremely toxic waste-- they can't compete on price. So the real question here is not should you be for or against nuclear power-- I'm agnostic. Let's go to the facts. Let's go to the data.

If it works on the basis I just gave, great. That will solve a ton of problems. It'll be fantastic. We haven't seen that happen. And when, in fact, companies, utilities in the United States over the last two decades have tried to build new nuclear facilities here, they've gone way over budget, they haven't been able to compete on cost, and ultimately, they've abandoned the projects because they just can't get it done at a reasonable cost.

ANDY SERWER: OK. So you're against it in its current state, which I understand. And I understand you're agnostic point.

TOM STEYER: Yeah.

ANDY SERWER: Right.

TOM STEYER: Andy, we're at a place where we need to look at this stuff with an open mind, but data-driven. And that's investing-- looking past the hype and talking about the facts.

ANDY SERWER: And if someone comes up with an amazing breakthrough in nuclear power, let's reassess it. Got it. OK, Bitcoin mining-- and we're going to drill down here. And it's drawing criticism from climate change activists as a contributor to climate change. Is Bitcoin a problem? And how should it be addressed, Tom?

TOM STEYER: Bitcoin is a huge user of electricity. So to the extent that electricity is derived from fossil fuels and is emitting greenhouse gases and other dangerous toxins, then, yeah, it's a problem. But the question here is, so step back a second-- I'm going to answer your question on Bitcoin, but step back a second and think about what I just said-- if we completely cleaned up our electricity generation so that when you, in fact, mine Bitcoin and use a ton of electricity, but that is all clean electricity that's not causing anybody's health or the planet's health to be dramatically diminished, then it's fine.

But at the current time-- just so you know, Andy, someone came up to me with a proposal-- this is probably four months ago, so not that long ago-- did I want to invest in a Bitcoin mining operation next to a coal plant? And the idea being you don't have to transport the coal, it's much cheaper, we'll be able to create Bitcoin at a big spread to the current price. This is a great moneymaking opportunity. That is a disaster.

That is a straight up disaster. So the real question is, when you think about it, clean up the electricity generation, electrify everything, be smart about your energy use. That's kind of the overall take on how we reduce emissions worldwide.

ANDY SERWER: Let me shift gears a little bit and ask you. Last year, you served as co-chair for California Governor Gavin Newsom's business and jobs recovery task force. How would you assess where the economic recovery from COVID-19 stands right now, Tom?

TOM STEYER: Well, I think-- I mean, Andy, that question is very different depending on where you're talking about, because there's no way of not realizing, and I know you do, that it's had a huge impact on everyone. But basically, where you came into this problem economically and how you've handled it in the interim is having a huge impact in terms of what it's done economically, in terms of what the recovery looks like, and what I think the recovery will look like.

I think that California has had the great fortune of having a huge entrepreneurial and venture-backed business base that is all about the virtual world that has taken off. And so when you think about the state of California, which I think, you know, obviously, our task force for Governor Newsom was focused on California because it's a California task force, of course-- you know, it was a tale of two cities, because the virtual world was taking off. I mean, you know, the number of virtual medical visits went up 100-fold.

You know, the amount of teaching that was done online went up 100-fold. There were a whole bunch of businesses that were virtual world businesses that just weren't growing anyway, and they just got-- you know, it was like they got a huge shot of adrenaline. At the same time, for physical businesses, for a lot of businesses that employ people, particularly in the service industries, in the hospitality and travel industries, you know, this was a devastating blow.

And so when you look at where we are, you know, in California, if you look at the overall economy and don't break it down into how specific people and parts of the population are distinguished, we're fine. You know, we went from, if you can believe this, Andy, a projection of a huge budget deficit to a fact of a gigantic budget surplus, because of all these businesses that are California-based that just went crazy. And they were doing well anyway, but it just exacerbated, accelerated the changes.

For people who were working in a lot of those big employment industries, you know, it was devastating from a work standpoint, very much ameliorated on a human level by government intervention, both at the federal and state level. But as we come out, we're going to see very much that there's going to be changes that are permanent in terms of the way that people do business, in the way that employers and employees relate, and the kind of economy that we have going forward. I don't there's any question about that.

ANDY SERWER: Couple of questions about politics, Tom. You ran against Joe Biden-- we just talked about him a minute ago. Has his presidency surprised you at all?

TOM STEYER: Look, I think that the Biden administration, if you step back and ask how they've done, the answer is, really well. You know, they have a tough hand to play. They're obviously coming into a situation with a previous administration that I think, in many ways, left this country in turmoil. And I think that they have stuck exactly to what they said they were going to do.

They have, in my mind, done a very good job of being straightforward, and talking about their priorities, and getting them done. So you know, have I been surprised? I wouldn't say I've been surprised, but I would say I've been impressed. I have a ton of respect for what they have done, and I have a ton of optimism about what they're going to do.

ANDY SERWER: What do you make of fellow 2020 presidential candidate Andrew Yang recently announcing he's leaving the Democratic Party?

TOM STEYER: You know, I saw that, Andy. I didn't really understand it. I like Andrew Yang. I think that he's a smart person. I think that he's a good person. I wish him well.

I don't really understand what he's trying to accomplish. I feel as if the Democratic Party, which has always been a big tent, represents the best impulses, the best values in our country. And I'm a consistent, you know, wholehearted, positive Democrat. So I wish him well. I wish he hadn't done it, but you know, I'll be interested to see what he pulls off.

ANDY SERWER: Let me ask you about your organization NextGen America, which is a leading youth voter organization-- turned out millions of voters. There seems to be a divide, though, in the Democratic Party about whether state level voter suppression laws pose an existential threat that needs to be addressed through filibuster reform in a federal voting law, or whether those suppression laws can be defeated by stronger voter registration and turnout. What do you think about that, Tom?

TOM STEYER: You know, I'm not sure that I have a great answer to that question. What I can tell you is this-- Next Gen is the biggest youth registration engagement and turnout operation in American history. You know, I have believed for a long time the young people, the people between 18 and 35, that's the biggest generation in American history. It's the most diverse generation in American history, by far. It's the most progressive generation in America.

And they were voting at half the rate of other Americans. And I think there was a strong sense that it's too expensive to organize young people. They're too disparate, they're too dispersed. And we should concentrate on the people who are already voting. And we decided back in 2013 that it's too expensive not to organize them.

And we've spent the last now nine years working to reach, to engage, to register, to turn out, to give a voice to that generation. And I am a huge believer in them. I'm a huge believer in their idealism and their values. I have immense respect for what they've accomplished as a group in terms of showing up.

In 2020, young people voted at the highest rate in American history, or at least since the 18-year-old vote. They've done a great job. In 2018, they did an amazing job. And if you look at the statistics, progressive candidates win when young people vote. And that's just a rule. And progressive candidates lose when young people don't vote.

And so we feel really strongly that young people engaging in the system so that we have an actual representative democracy-- how about that idea, one that reflects American citizens' values and desires is something that's incredibly important. It's the fundamental part of our society. And we've worked really hard for nine years to try and make that happen and to really support and engage those young people so that they can make the difference that, you know, we really believe they can make.

Andy, I'm a huge-- you can tell-- I am just so impressed with that generation. I've got four kids between the ages of 27 and 31. And I've gone out to tons of campuses and signed up tons of kids personally. And it is an incredibly rewarding experience. And if we put the future in their hands, where it rightfully belongs, we're going to do really well as a country.

ANDY SERWER: California Senator Dianne Feinstein is 88 years old, and her term ends in 2024. If she retires before then, Governor Newsom will appoint her replacement. Do you want to be among his considerations?

TOM STEYER: Andy, I am completely dedicated and committed to Galvanize Climate Solutions. I believe this is a global crisis for all of us. I believe that we're in the execution phase. And I want to be in the heart of that solution working with policymakers, but really pointing out that this is the time, society-wide and specifically for business, to step up and solve a problem that if we don't solve it, will engulf us.

And you know, I live in California. We've seen these fires every summer. We've seen them growing. You know, everybody can tell this is happening. It's time for us to solve this. And I really want to be part of that solution. That's what I'm focused on is really engaging in that, coordinating with other people. I'm really not thinking about anything else.

ANDY SERWER: And final question, Tom-- you're a billionaire who supports a wealth tax. There are some people who say billionaires shouldn't exist. What do you say to those people?

TOM STEYER: Look, I have always thought that the capitalist system is going to and should reward people for coming up with ideas and products that make other people's lives safer, healthier, more fun, more productive-- absolutely. Does that bother me? Absolutely not. Having said that, do I also think that those people when they succeed, when a Bill Gates succeeds-- did he create Microsoft? Yeah, at some level, he did.

But he did it within a system that other people, millions of poor people, millions of unassuming people had dedicated their lives to create. So he was building-- you know, the old saying, standing on the shoulders of giants-- everyone who creates a company in the United States is standing on the shoulders of giants. They are part of a system that had enabled them.

And the idea that their success is theirs alone and is not shared with their fellow citizens makes no sense to me. It seems to me to be absolutely missing the point of America. So do I have problems with the idea of a wealth tax where society has gotten so out of whack in terms of the inequities of wealth? No, I'm totally for that.

I think, you know, Bill Gates and Warren Buffett, and Melinda Gates started something about giving away at least half your wealth while you're alive on the assumption that you recognize you are part of society, you have huge obligations, responsibilities, and debts to your fellow citizens who have done so much-- that teacher, that soldier, that nurse who've done so much to create a system that is safe for you to go write some code and make a ton of money.

So let's just be clear-- we're in this together. Nobody is going to succeed in the United States of America without everybody else succeeding, as far as I'm concerned.

ANDY SERWER: Tom Steyer, former hedge fund manager in 2020, Democratic presidential nominee who recently launched an environmental investment platform called Galvanize Climate Solutions, thanks very much for your time.

TOM STEYER: Andy, it's nice to talk to you again.

ANDY SERWER: You've been watching "Influencers." I'm Andy Serwer. We'll see you next time.

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