Climate Crisis: From panic to doing. Start with these 2 books.

If everyone does a little, we will achieve only a little.

Sir David JC MacKay

It is 2019. Most most people are aware of climate change and the need to act, few people know how. I have spent the better part of this year to think and discuss with many people from the industry:
A VC from a Billion Dollar fund responded on how they act on climate change: “We lack proper information, but at least the money we make goes to US endowments”. Mainstream Silicon Valley goes like this: “Khosla nearly got killed over clean tech in 2006. We will stick to what we know best”. And the space guys go: “Earth is finished, let’s do the same to Mars”.

Even some of the most influential people seem clueless or powerless to do something. What we’re up against? Ignorance and disinformation. In a very recent study the public in the US and Germany rank “no more plastic bags” as the #1 action against global warming.

We need proper facts.

Whatever you intend to do about climate change as a founder or investor: You need to get proper facts. I found two fantastic books on what do about climate change.

“Drawdown” lists 100 measures to take reverse global warming. While top 1 in “Climateology”, it ranks only #1225 today on Amazon in the US, so chances are you might not have read it yet. Please read it.

Drawdown lists 100 measures, many you will probably not have heard of, that will contribute massively to reverse climate change.

There are downsides with Drawdown, not a lot of statistics, it often evades hard questions, but in general it is a wonderful book. You can access all of it’s contents here: drawdown.org, but I recommend you buy the book as it is an easy coffee table read, and you want to be armed with facts.

The book that blew my mind however, is “Sustainable energy without the hot air”, which I think is the most important book on climate change ever written. David JC MacKay was an engineering professor at Cambridge, and an advisor to the UK government. Sadly he passed away in 2016, which is why you may not have seen him on TED recently. The book is from 2009 but please go and read it. The physics have stayed the same*. We use too much energy. And attempts at providing this energy with renewables are not adding up. MacKay arms us with numbers.

If everyone does a little, we will achieve only a little.

Sir David JC MacKay

MacKay did the world a favour by measuring energy consumption and creation
per person in kilowatt hours per day: kWh /d

Typically a tea kettle or a blow dryer will consumer 1000 watts or 1 kW electricity.
If you let this run for an hour, you get one kWh.

The average person consumes roughly 120 kWh of energy per day.
The average person in the US is about 200 kWh.

If you think in liters of gas: 1 litre of gas is roughly 10 kWh**. 100 km (60 miles) in your car at a practical consumption of 8 liters per 100 km means your car uses 80 kWh for 100 km.

In terms of daily energy use, some BIG drivers are:

Cars: If you have a daily commute of 40 km / 20 miles that is already 32 kWh per day.

Flying has a massive impact: Depending on the number of flights per year, flying will average out to an increase in your daily consumption by 30-60 kWh per day*.

Heating & cooling your home (in Europe, not much AC) is about 37 kWh per day. Easily double this if you use AC in the summer.

MacKay goes on in detail about the full potential of wind, solar and biomass, and in the end: the numbers just don’t add up. While wind and solar are fantastic, we simply would run out of land for wind and solar, not to speak of the intermittency problem.

I have probably 20 more blog posts about how we an go from being aware to actually acting, and I hope to churn them out over the next couple of months. Stay tuned.

Footnote

*While Physics has stayed the same, fortunately some technology has improved. Tesla was a small blip with the roadster back in 2009, no Model 3 yet outselling BMW and Mercedes in the US like in 2019. When the book was written, a 747-400 still seemed like an improvement over the previous model, while today’s A 350 is a 40% improvement on that plane.
** 1 liter of gas contains 8.9 kWh energy.
*** I am fully aware of the fact that I was running an airport app until recently.

Departed. An update on FLIO.

(I am writing this from a cottage in Quebec with 5% battery left, so no perfect formatting…)

FLIO is in process to be sold to SOS Travel SPA in Italy.
If you are a user of FLIO, this means that you get to continue to use FLIO, the most used airport app in the world. FLIO has now more users than ever before and nobody else in the space comes even close.

For me as founder, this is the first business in my career where I have lost money, as have our investors. As I spend most of my time these days mentoring startup founders and investing in early stage deep tech and AI startups, I would like to share a couple of learnings.

The opportunity. “The golden hour on the sixth continent” 

This was an article in The Economist which prompted me to to move into the airport space. Passengers are confused and stressed at airport, at the same time, the “trinity” of airports, retailers and travel brands make a lot of money with them. And they are all very far from being digital. And the industry is huge, global and seems forever growing.The business logic was to build something that is useful enough for passengers to find mass adoption, then charge the industry for advertising on it.

Most of my VC friends passed on FLIO. The ones who I respect most now gave me one reason: A oligopoly in supply is not a good bases for a marketplace.

I was not held back. There are more than 300 commercially relevant airport in the world. So we got started at the very end of 2014.

Here is a rough chronology how we evolved FLIO:


Phase 1. 2015 FREE WIFI AT AIRPORTS
In its first incarnation in 2015 we built a hack to log people into the varying free wifi without having to fill the often stupid questions airports asked before they let you in. This worked often. But we could not get past the Boingo portals, which are most used in the US. Worse: whenever we successfully logged a user into the Wifi, passengers complained that the Wifi was slow and buggy. we could never fix poor airport Wifi, and they were very poor in 2014.
So while our customer acquisition was flying, we did not have a great product then. Many people are surprised when we tell them today that Flio is not about airports wifi anymore.

Phase 2. 2016-2017 FIND WHAT YOU WANT AND GET A DISCOUNT
In a pivot, we worked with some of the largest food & beverage companies to provide discounts, maps and directories. The logic was that very often you don’t find what you want, and both airports and retailers have no way to personalise and experience. We we were thrilled to have very positive feedback from some of the largest duty free retailers (did you know that the largest airport retailer has more than 40% market share globally?).
We had lots of discussions, and also sold some advertising campaigns to top brands. Yes, airports are the most expensive environment to advertise in, so why not extend this into our app.

There were several problems in this phase:

We were not that exciting for passengers (discounts?), and while we had a good liquidity in our market place in some pockets like the UK, we were far from having a global footprint.

While our cost to acquire customers was super low, they just did not stay. Our user numbers did not develop as fast as we need them to grow in order to justify continued interest from advertisers.

Most importantly, even though some of the very largest retailers scheduled meeting after meeting with us, it took us too long to realise: Retailers were not prepared to pay us any money. They did like to work with us to show to the airports how digital they were. But retailers did not need us in 2017. The way the industry works is: Retailers bid long term contracts with airports. Nearly all of the profits go to the airport, hence the profit margin of a well run airport is very high. The profit margin of even the best run retailers is extremely small. While we were always able to generate some extra margin, we did not move the needle for them, at least not in 2017.

If you are a founder of a startup depending on industry buy in, always ask yourself if they take a meeting to look good internally or if they genuinely need you.

Phase 3: 2018: The best flight tracker
In order to overcome FLIOs problem with not enough repeat users, we built a very very good flight tracker. You connect your calendar to FLIO and FLIO updates you on late departures, gate changes etc. We worked with generally available data sources, large airports and airlines directly, and were able to build a really good flight tracker which fixed the problem of repeat usage. That increased our usage dramatically, but pushed us away from our original USP.

Phase 4: 2019: Predicting what happens at the airport.
Based on my work as a mentor in the Creative Destruction Lab in Toronto, I finally had the realisation that we had to offer true innovation for passengers to be truly useful. To put it bluntly, we realised that the industry would never pay us and we had to make passengers love us.
We built two, I believe amazing products:

  • FLOW measures how passengers progress through airports and predict security waiting times. This went live for Hamburg airport in June and can be scaled out to any airport. 
  • DEPART predicts when your flight will actually leave depending on when your plane comes in.

Both are super useful, and nobody else offers these tools to passengers. Also both were technically not possible even 12 months earlier as phone accuracy was not enough and the databases were not available to use for the second problem.

In Phase 4, this year, I was truly excited in the potential of FLIO again. We  finally had discussions with VCs again despite being on the market for so long. We spoke to strategic investors which looked promising.

As you can guess by now, these four iterations meant that we lost too much time. We were never able to raise a lot of money for FLIO, our investor from Phase 2 lost patience with us through Phase 3 and had no interest in Phase 4. 
In June, it became clear that we would not get fresh money quickly. We had taken too long and were stuck with a capable that did not look great for new money coming in.

So now, FLIO GmbH, the German subsidiary which actually runs operations, as well as the assets from FLIO Ltd, a UK company have been sold on to SOS Travel who already have a model to make consumers pay. The parent company, FLIO Ltd UK has been put into administration as the lead investor, who gave the latest investor as a loan, did elect not to convert this investment loan into equity.

Most staff of FLIO have long found other opportunities. If you read through the above you can guess that we’ve found and kept excellent developers who were able to excel at any new challenge once we finally gave them to them. As for the sales people: Anyone who has worked selling something successful that was always „too early“ must have been stellar. Our content team and business analysts are amazing. So I am hugely grateful too anyone who had devoted their energy to making airports less confusing and less stressful.

For me, this means finally freeing up valuable time and being able to focus on working with deep tech which does excite me massively. One of the startups I work with can help people get the best treatment for cancer. One can help aircraft engines save fuel. One will help monitor global methane emissions. Lots to do.

As a mentor to startups after 6 successful startups and now one partial failure, I am more sensitive to the following topics:

  1. If it is a marketplace: Make sure the key players need you.
  2. If all your VC friends say no. Could they have another reason than “not getting it”.?
  3. Is your investor flexible enough to go the next pivot?
  4. Convertible loans sound nice, but what happens if the next round doesn’t happen?
  5. Always decide who your customer is. And love them.
  6. Make sure your USP is crystal clear. A new USP sometimes justifies a new brand. It is hard to sell a „Swiss army knife“ for x.

Climate Change – this will be our war.

The tech industry – which I am a part of – is full of contradictions: The same people who think that we can live forever or fly to Mars, shrug their shoulders when you confront them with the subject of  global warming.

I’ve always been concerned about the environment. As an engineer the waste of resources and our trash culture was always painful to observe. I did my bit like co-founding avocadostore.de which is a marketplace for eco-friendly goods. 

Over the past 15 years it became increasingly clear that wasting resources is much less of a problem than global warming.

In a typical boiling-frog-scenario, we were all content with green washing, some trash separation, believing that our next car would use less gas, and a general feeling that technology, exemplified by LEDs and solar energy will eventually solve our problems. 

The approach so far is not enough. We will have to change.

I am so delighted that the kids of Fridays for future were the first to wake up. They can’t do it by themselves. We all are in this together. I am convinced that we can succeed in this massive challenge for humanity. 

In a similar way as previous generations had to win two world wars for civilization to continue, I believe we will win our war on climate change.

It will not be enough to change our individual behavior, as industry and business try to convince us. We as voters will need to influence our political environment of all parties that we need new guard rails for business and industry. A new playing field.

Being able to anticipate shifts in attitudes and behaviors has fueled my entrepreneurial trajectory.

I see such a shift now, and I will be part of it. 


Reflecting this year’s Q&A with Warren Buffett in Omaha

As Warren Buffett has become mainstream, it is now easy to confuse the forest and the trees of the headlines. I made my first trip to the annual meeting of Berkshire Hathaway in 2008 and have been to the event seven times in total. Going back to Omaha is not so much about learning something new, but to be reminded of the important bits that I forget in between.

Highlights from the livestream.

One of the  payoffs of going to Omaha and observing how Warren and Charlie make it through six hours of live Q&A: You get an understanding that the power of your brain does not diminish as long as you exercise it.

The meetings are now being streamed live: Yahoo Finance. The full coverage is seven hours. Few people will make it through, here are a couple of highlights.

16:00 mins: the Prerecorded interview with Warren, talking about bitcoin, and wanting to be remembered as a teacher. More than his track record, his desire to teach makes listening to Warren much more valuable than listening to the many self-proclaimed value investors and often imitators.

50:00 min: Warren gives one of his great lectures on investing. Worth watching the newspaper clippings and then how he explains what would have become out of 10,000 $ invested in the S&P in 1942, when bad news was at its peak, as opposed to buying gold.

Key takeaways from this year

In content, I did not get as much out of it as in some previous ones after the financial crises. This time, I noted some long-term optimism about China as a system. Also notable: a surprising absence of any political agenda, even when pushed by questions from the audience. Buffett insisted on separating his personal views from the business.

It is worth to invert: What did not happen at this meeting nor at any other: Warren Buffett does not talk about succession plans. More generally, as I started digging deeper into this in recent and earlier interviews and speeches, I noted the many references how much he enjoys painting his own painting. But also references to people who never stop working like the CEO of flight safety, who ran the company at age 85, or his anecdotes about Rose Blumkin, who died at age 104, after stopping to work for Nebraska Furniture Mart at 103. You can also see the reference in the “Berkshire System” as laid out in Charlie’s letter to Berkshire shareholders here: There is no age limit for managers.

As now there is way too much about Buffett and Munger (any news outlet do their own ill reflected click baits, there are more than 100 books about Munger), let me list some of my top references:

The best Interviews and speeches:

The essence of Charlie Munger and Warren Buffett  in writing:

Many of the books about Buffett and Munger obscure more than they reveal: As both are very good communicators, it is always a good idea to read the source:

  • The essence of Berkshire Hathaway:
    Special Letters to the Shareholders, the present, the past and the future As they’ve written both their versions, you get two very different approaches.
  • The essence of Charlie Munger. Charlie has been quoted and quoted again, and I think his unique approach to critical thinking is the consistent theme. This is best visible in his 1995 speech The psychology of human misjudgement, which is also the centrepiece of his own book “Poor Charlie’s Almanack”.
  • The essence of Warren Buffett is more difficult to pin down into one core piece. But in his original writing: The Superinvestors of Graham and Doddsville from 1984. Buffett essentially proves that value investing works. This was before value investing became super hyped. Since then Buffett has evolved many times over.

Some of the blogs that I enjoy most:

  • Farnam Street Shane Parrish fs.blog
  • 25iq by Tren Griffin: 25iq.com

Investing in AI & deep tech in Toronto

For two years now, I have been involved in the startup scene in Toronto, centred around but not limited to Creative Destruction Lab (CDL). Toronto, together with Waterloo is an amazing technology hub, which is super successful in AI but also other deep tech endeavours, ranging material science to biotechnology.

My experience as a mentor at CDL is so far amazing, and I remain humbled to be in such an impressive group of advisors. CDL is unique in its approach: Minimizing the time it takes up from founders and maximizing value add by bringing them together with a broad range of experienced entrepreneurs, scientist and investors. CDL gives startups regular exposure to the most prominent VCs from Silicon Valley including Data Collective, Highland Capital, Khosla Ventures and Google Ventures.

After two years now, I am surprised that I have invested in approximately 12 early stage tech startups in the AI and deep tech space. This contrasts strongly with the number of investments in Europe: Where I invested, it was purely because I believed in exceptional founders.The founders I work in Canada with are absolutely stellar. Being sector agnostic helps: My sectors include now health, industrial, infrastructure. Being able to share my experience in hyper-competitive markets, working with venture capital, scaling sales, growing internationally, while at the same time learning from a group of amazing entrepreneurs is very rewarding. What is more, I believe that the returns of these investments will be very good. Early stage investing is always risky, but at least half of my very young early-stage companies already have received follow-on investments from much larger funds, a very good indicator for me.

(above: view from Toronto’s Billy Bishop Airport, returning from a day trip to Montréal.)